As the year 2024 comes to a close, the performance of U.S. stocks presents a mixed picture, with notable declines among major players. Among stocks valued at over $5 billion, Intel Corp. (INTC) has emerged as the largest loser, falling 59% from its previous year’s value. Following closely are Moderna Inc. (MRNA) with a 58% decline, Walgreens Boots Alliance Inc. (WBA) at 57%, Celanese Corp. (CE) down 55%, and Five Below Inc. (FIVE) trailing at a 52% drop. The downturn raises questions about the sustainability of these companies in their respective markets, prompting investors to consider potential rebound opportunities.
Intel’s significant drop is attributed to several factors, including a failure to pivot in accordance with industry shifts toward mobile technology and artificial intelligence. Once a leader in the semiconductor industry, Intel’s stock now languishes at roughly 73% below its all-time high from 1999. The company experienced a sharp decline in earnings since 2021, culminating in CEO Pat Gelsinger’s resignation amid escalating pressure. Despite these challenges, there is optimism surrounding Intel due to its ongoing involvement in U.S. chip manufacturing and the prospective financial benefits from the Chips and Science Act of 2022. This Act, which received substantial bipartisan support, positions Intel to potentially unlock billions in federal funding, despite its multitude of internal issues that the market has priced into the stock.
Meanwhile, Moderna, credited with a pivotal role during the COVID-19 pandemic through its innovative vaccine, has also seen its stock plummet by 58%, settling around $42—down 91% from its pandemic heights. While the company lacks a diverse portfolio of drugs, its foundational messenger RNA technology holds promise for future developments, warranting investor attention. Currently sustaining losses, Moderna retains over $6 billion in cash and marketable securities, along with manageable debt levels that account for only 11% of its net worth. This financial buffer should allow Moderna to continue its efforts in drug development and the pathway to profitability, although past recommendations have not yielded anticipated outcomes.
Walgreens has experienced a stark change in investor sentiment, which seems disproportionate considering the company’s substantial market presence and historical performance. Historically, Walgreens has maintained profitability for 28 consecutive years. However, recent losses have led to concerns about its financial stability, although CEO Tim Wentworth has indicated that the majority of its stores remain profitable. With plans to close approximately 1,200 unprofitable locations over the next three years and rumors of potential acquisition interest from private equity firms, there’s potential for the company to rebound and regain investor confidence.
Celanese, the Texan chemical company known for producing acetic acid and polymers, has also faced a substantial earnings decline, driven by increased competition from Asian markets and downturns in relevant sectors such as automotive. Although a recovery is possible, the company’s high debt levels deter investment interest at this time. Conversely, Five Below, which targets a demographic of teenagers with budget-friendly products, faces a precarious future. The retailer relies heavily on imported goods to maintain its low pricing model. Potential tariffs proposed by the incoming administration could further erode its margins, raising red flags for investors who are already cautious about retail stocks.
Historically, the examination of underperforming stocks has yielded a degree of profitability for identified prospects. The author notes that of the stocks reviewed in 13 previous years, those selected for investment averaged a one-year return of approximately 20.99%, surpassing the broader market index in several instances. While stock picking in this manner has its merits, it’s important to remember that past performance is not an indicator of future results. The lessons from this year serve as a reminder of inherent market risks and the necessity to exercise caution in investment strategies, particularly given the volatile nature of the sectors represented by the mentioned companies.
