Not all stocks have succeeded in the bull market that began about 18 months ago. In the current market, a rising tide has not lifted all boats. In fact, there are some very notable names that are currently on the decline. Who would have predicted a year ago that names such as electric vehicle maker Tesla (NASDAQ:TSLA) and consumer electronics giant Apple (NASDAQ:AAPL) would be down by double digits and badly lagging the benchmark S&P 500 index?
Yet this is the case as the competitive landscape and consumer trends have shifted. Once true blue stocks and reliable brands can no longer be trusted to deliver outsized gains to shareholders and surpass market returns. As such, investors are having to adjust their thinking and reevaluate their approach to stock picking. Here at InvestorPlace, we aim to help and offer the following warning. These three clue-chip stocks will have you seeing red. Avoid them at all costs.
Johnson & Johnson
Pharmaceutical giant Johnson & Johnson’s (NYSE:JNJ) stock has been a crushing disappointment for a long time. In the last 12 months, JNJ stock has declined nearly 10%, including a 6% drop this year. Through five years, the share price has gained a paltry 7%. Litigation related to its talc baby powder has weighed heavily on the stock. So too have middling financial results and a costly restructuring that hived off the company’s underperforming consumer healthcare products such as its shampoo.
Johnson & Johnson just reported its first quarter 2024 financial results, and they were once again mixed. Earnings per share (EPS) of $2.71 beat analyst expectations of $2.64. However, revenue in the quarter came in at $21.38 billion compared to $21.40 billion that was forecast on Wall Street. Johnson & Johnson got a slight boost from its medical device business, where sales rose 4% from a year ago. However, the company lowered its full-year guidance, narrowing both its sales and profit outlooks. Wall Street was not impressed.
AT&T (T)
Shares of legacy telecommunications firm AT&T (NYSE:T) have been firmly in the red for years now. Over the past five years, T stock had decreased 30%. So far in 2024, the company’s share price has slid 6% lower. Even a rock bottom valuation of eight times future earnings estimates and a quarterly dividend that yields 6.81% isn’t enough to attract investors. The company, which remains the biggest wireless carrier in America, has careened from one disaster to another for the better part of a decade.
The latest terrible news to drag T stock lower are reports that millions of its customers’ data was published on the infamous “dark web,” a corner of the Internet that can only be accessed using special software. AT&T said it is actively contacting more than 7.5 million impacted active customers, along with 65 million former account holders. The leak apparently involves data from 2019 and includes personal information such as names, home addresses, phone numbers, dates of birth, and Social Security numbers. Ouch!
Lululemon Athletica (LULU)
Down nearly 30% on the year, shares of Lululemon Athletica (NASDAQ:LULU) are among the worst performing in the S&P 500 currently. In fact, as of this writing, LULU stock is the fifth worst performing stock listed on the benchmark index. The share price has been sliding lower ever since the athletic apparel company reported earnings in March that showed its North American sales slowing. The company reported that its Q4 2023 sales rose 9% in North America compared to 29% growth a year earlier.
Lululemon also announced that, owing t0 declining sales, it is closing a distribution center in Washington state and eliminating 128 jobs. The company said it decided to close the distribution center as part of a re-evaluation of its network in the U.S. and Canada. The closure comes after Lululemon provided weak guidance, saying that for all of this year it expects sales of $10.70 billion to $10.80 billion compared with estimates of $10.90 billion. Profits are forecast at $14 to $14.20 a share compared to a $14.13 estimate on Wall Street.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.