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Today's 3 Worst Stocks in the S&P 500

By John Divine - Feb 5, 2014 at 7:04PM

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These 3 stocks, including one biotech with big potential, fell Wednesday despite only modest market declines

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The stock market ended lower today, though the losses weren't anything like the sharp daily declines investors have been getting used to this year. While it may feel like 2014's brought nothing but pain and hardship to your portfolio, the S&P 500 Index (^GSPC 0.47%) is down just 5.1% so far this year. Keep in mind, too, that the stocks entered 2014 at all-time highs, so Wall Street's still doing OK. With little macro news to fuel excitement, the benchmark S&P index fell 3 points, or 0.2%, to end at 1,751.

Of course, in any grouping of 500 stocks, there will be dramatic decliners no matter what the broader market does, and Cerner (CERN) shareholders were the victims of that phenomenon today. Cerner's stock slumped 6%, even though its quarterly results -- which it announced Tuesday afternoon -- were largely in line with expectations. Sales grew at a 12% yearly rate in the fourth quarter, slightly exceeding forecasts. Projected first quarter earnings of $0.36-$0.37 per share were the culprit here, narrowly missing Wall Street's $0.38 EPS estimate. For stocks with high multiples like Cerner, even minor disappointments like this can send shares spiraling downward.

Gilead Sciences (GILD -0.21%) investors were victims of very similar circumstances today, as shares dropped 4.7% after yesterday's earnings. Gilead Sciences basically had a blowout quarter, beating profit estimates by 10% and revenue expectations by 9.5%. But it was what Gilead didn't address that sent shivers through investors' spines. The company's Hepatitis-C treatment, Sovaldi, has been the subject of much speculation on Wall Street; Sovaldi's potential success could act as a catalyst for the stock if it sells well. Gilead, however, chose not to even project what Sovaldi sales would be like in the coming year stoking fears that expectations for the treatment are too high.

Finally, shares of San Antonio-based petroleum refiner Valero Energy (VLO 0.91%) lost 3.9% Wednesday. Sadly there's nothing too dramatic to report about the slump today -- oil and gas stocks were simply the worst performers in the stock market today. On top of that, Valero Energy shares are fairly volatile, and they've rallied more than 25% in the past six months, so investors may merely be cashing in on gains. Trading at a P/E of just 9.3 while paying a 2% annual dividend, Valero still looks like a solid, if low-growth, option for more conservative long-term investors.

John Divine has no position in any stocks mentioned. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,229.83 (0.47%) $19.59
Valero Energy Corporation Stock Quote
Valero Energy Corporation
$112.78 (0.91%) $1.02
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
$63.01 (-0.21%) $0.13
Cerner Corporation Stock Quote
Cerner Corporation

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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