#244: Biggest losers in S&P 500 YTD & What could be a buy
In this email:
Biggest losers in S&P 500 YTD
Reasons not to buy
Which tickers could be a buy
Biggest losers in S&P 500 this year so far
It's been a great year for US stocks generally. S&P 500's up ~11% year-to-date (as of writing), despite the volatility we had in April.
However, as you see here, not all 503 (not 500) companies in the S&P 500 did well, to say the least - some of these could be a great buying opportunity
Reasons not to buy the dip
Before we get into potential buys…!
While some of these beaten-down stocks might look like bargains, there are compelling reasons to exercise caution before jumping in.
Deteriorating fundamentals: Declining revenues, shrinking profit margins, or mounting debt loads often signal deeper operational problems that won't be solved by a temporary stock price bounce
Sector headwinds: Some industries face structural challenges like regulatory changes, technological disruption, or shifting consumer preferences that could keep pressure on these stocks for years
Falling knife syndrome: Stocks that are down significantly often continue falling further (#momentum), and trying to catch them at the "bottom" can lead to substantial additional losses before any recovery begins
Which tickers could be a buy
At a quick glance, here are some names that stand out to me.
UnitedHealth: Quite a tumultuous year for the stock and company itself, to say the least. Stock is back to 2020 levels, with 2024 full-year revenue much higher than 2020's. The struggle here is profit margin - regardless, this could be a multiple-year recovery experiment, and ~2.70% dividend helps if anything.
The Trade Desk: Disappointing Q2 earnings. Nonetheless, quite a solid, unchanged dominant presence in its market. 30% drop post Q2 earnings. Sell-off could be overblown
Lululemon: Now this is where I'm almost stretching, but a 0.5% portfolio allocation to this gives the chance of benefitting from brand recovery or tariff navigation well done, as its current valuation is already at multi-year lows.
Of course, I'd do further research, and if I were to "buy the dip" on some of these, I'd personally keep each ticker 1% of my portfolio.
This limits the potentially exciting gains coming out of buying the dip, but knowing these tickers are getting beaten down, I'm personally okay with the 1% threshold limit.
💡 IMO:
Buying the dip on SPY is never hard for me. But, buying the dip on already-beaten down stocks should never be an easy thing to do.
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