John Dorfman writes a syndicated column that appears weekly in Forbes.com, GuruFocus.com, Ohio.com, the Omaha World Herald, the Pittsburgh Tribune Review and the Virginian Pilot. In it, he tries to provide original, profitable stock ideas for readers. In contrast to almost all other investment columnists, he systematically reports on past results, both good and bad.
Recent columns are archived here.
Posted: December 17, 2024
December 16, 2024 – (Maple Hill Syndicate) – As each year draws to a close, I like to poke the embers of stocks that have done the worst.
Through unlucky Friday (Dec. 13), here are the worst performers among all U.S. stocks that have a current market value of at least $5 billion and that were publicly traded for all of 2024.
Most years, I find one or two stocks among the biggest losers that I think are worth buying. This year there are three – Intel, Moderna and Walgreens.
Intel
Intel is trading 73% below its all-time high, which was reached about 24 years ago. The company, which was the king of chips for personal computers, partially missed the transition to mobile devices and largely missed the movement to artificial intelligence.
Earnings have fallen severely since 2021. CEO Pat Gelsinger was booted out in early December.
However, I think Intel will benefit from the political and economic conflict between the U.S. and China. Intel still makes a lot of its chips in the U.S., and therefore may get a lot of money from the Chips and Science Act of 2022. It has already been allocated $7.8 billion.
The Chips Act was a pet project of President Joe Biden, and President-elect Donald Trump criticized it on the campaign trail. Nonetheless, I suspect that Trump will leave it mostly in place.
Moderna
Moderna played a big role in saving the U.S. from the Covid-19 pandemic. It doesn’t offer a broad cornucopia of drugs, but I believe that its messenger RNA paradigm may, and probably will, lead to other useful drugs.
The stock, at about $42, is trading 91% below the heights it reached during the height of the pandemic. The company is sustaining losses. But it still has a good balance sheet, with more than $6 billion in cash and marketable securities. Debt is only 11% of the company’s net worth.
That should buy the company time to develop more drugs and return to profitability. Confession: I also recommended Moderna a year ago, thinking it had bottomed. How wrong I was.
Walgreens
From the way investors have soured on Walgreens, you would think bankruptcy was imminent. I think it’s unlikely. Before Walgreens hit its current rough patch (with losses in the past two fiscal years), it had a profit streak of at least 28 consecutive years.
Tim Wentworth, the company’s CEO, said on a recent earnings call that about 6,000 of the chain’s 8,700 stores are profitable. He said the company will close about 1,200 stores over the next three years. This makes me think there’s a decent possibility of righting the ship.
There have also been rumors that Walgreens would consider being bought by a private-equity firm.
Celanese
Celanese, based in Irving, Texas, is a chemical company producing acetic acid and polymers. Earnings have nosedived this year, due partly to increased competition from Asia and weakness in the auto industry (a major market for this company). It may recover but I don’t recommend it, mostly because debt is high.
Five Below
With about 1,700 stores, Five Below is a retailer that caters to teens and tweens. Most items in its stores are prices at $5 or less. The more expensive ones are about $25.
I’m pessimistic on this stock because I figure the company needs to import a great deal of its merchandise in order to offer the low prices teens want. If President-elect Trump gets the tariffs he proposes, I think Five Below will be hurt.
The Record
The column you just read marks the 14th time I’ve tried to pick through the rubble of the year’s biggest losers. For the first 13, the average one-year return on the stocks I liked was 20.99%, versus 16.84% for the Standard & Poor’s Total Return Index.
Only four of the 13 columns have beaten the index, but those four beat it by a large margin, in each case with a return over 100%.
Bear in mind that my column results are hypothetical and shouldn’t be confused with results I obtain for clients. Also, past performance doesn’t predict the future.
My two picks from a year ago flopped. Moderna fell 51% and FMC Corp. (FMC) fell 6%. That pulled down my long-term average quite a bit.
Disclosure: I own Intel and Moderna for one or more clients. A hedge fund I manage holds call options on Walgreens.
John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts, and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.