Winners and Losers Reveal the Market’s Flavor This Year

John Dorfman

March 27, 2023 (Maple Hill Syndicate) –    You can understand a lot about this year’s stock market by looking at the winners and losers among the nation’s biggest stocks. Among the 167 stocks with a market value of $100 billion or more, the best performers this year are:

  • Nvidia Corp. (NVDA), up 83%.
  • Meta Platforms Inc. (META), up 71%.
  • Tesla Inc. (TSLA), up 55%.

The worst performers are:

  • Pfizer Inc. (PFE), down 21%
  • Bank of America Corp. (BAC), down 19%.
  • ConocoPhillips (COP), down 16%.


As if often the case, I’m more partial to the losers.

Let’s start with Bank of America. Spurred by the failure of Signature Bank and Silicon Value Bank, bank stocks have fallen hard. Bank of America stock now sells for less than nine times earnings. Its average multiple in the past decade has been 14.

That sounds like a chance to buy a good company on bad news, which I love to do. But banks are suffering because short-term rates have risen above long-term ones. Banks “borrow short” (through deposits) and “lend long” (mortgages and business loans).

So, I think it makes sense for investors to take a toehold now, and gradually expand it over the next six to 12 months.

I like the energy sector, and think highly of ConocoPhillips, the third-largest U.S. energy company by market value. After its fall this year, ConocoPhillips shares sell for less than seven times earnings. Their normal multiple is about 10.

As for Pfizer, I think it’s very attractive at about $40, down from near $60 at the height of its Covid-pandemic popularity. Pfizer was one of three U.S. drug firms that developed a vaccine to prevent Covid-19. It also makes Paxlovid, a leading treatment for the disease.

The pandemic appears to be waning, so Pfizer will lose a major source of revenue. But to me, the stock is more than cheap enough to compensate. Despite a sparkling return on equity of 36%, shares go for only seven times earnings. The median multiple during the past decade has been 17.

High-Class, High Price

The stocks that have roared this year are expensive growth stocks. Most of them are technology stocks, recovering from the shellacking that tech stocks endured in 2022.

Investors relish these stocks because they expect the companies to have much higher earnings five or six years from now than they currently do. But the present value of a dollar of earnings five or six years from now goes down when interest rates rise – and the Fed raised rates repeatedly in 2022.

Whenever investors reckon that the Federal Reserve will stop raising interest rates, these stocks spurt. That happened in January and again in March.

In January, investors figured the Fed would be placated because inflation seemed to be falling. It did fall, but only a little.

This month, investors supposed that the two bank failures would force the Fed to take its foot off the economic brakes. It’s not yet clear if that will happen. Optimists cheered that the fed raised rates only a quarter point in March, rather than a half point as previously feared.

Nvidia has been a powerhouse semiconductor maker for more than a decade. It always seems to have the right chips for the newest, most advanced applications. The stock tripled in 2016, and doubled or better in 2020 and 2021. Last year it was down 50%.

I find Nvidia stock too expensive at 153 times recent earnings and 60 times analysts’ estimates for the fiscal year that ends in January 2024.

Meta Platforms, parent to Facebook, Instagram and WhatsApp, boasts a phenomenal 10-year growth record. It increased its revenue 36% a year and earnings almost 69% a year. But last year revenue growth tailed off to less than 5% and earnings fell.

Meta stock, at 24 times earnings, is only moderately more expensive than the typical stock (which fetches 18 times earnings). But the company laid off 11,000 workers in November and announced this month it will cut another 10,000. This will be a “year of efficiency,” CEO Mark Zuckerberg said.

The total cuts amount to roughly a quarter of its workforce. Some people admire such cost-cutting. I don’t. I think layoffs are more a sign of weakness than of strength.

As for Tesla, I admire its cars and have long been a skeptic on its stock – a big mistake in retrospect. The valuation of 52 times earnings is too rich for my blood.

Disclosure: I own Pfizer personally and for clients. A few of my clients own ConocoPhillips, Nvidia or Tesla.

John Dorfman is chairman of Dorfman Value Investments in Boston, Massachusetts. His firm or clients may own or trade the stocks discussed here. He can be reached at

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