After the stock market’s antics in May, things appear to be on the mend in June with the broader market trending upwards. But even simple trading strategies such as long-term capital gains investing must acknowledge that a rising tide does not lift all boats. Some stocks have been pushed down for a reason following the stock market’s consolidation last month, and these picks need to be trimmed from your portfolio immediately. Don’t overlook a telltale sign like soaring PE ratios or flagging earnings just because you think the bulls are back. Pull the trigger now before it’s too late!
Out my entire Portfolio Grader database of 5,000 Wall Street investments, these are the 10 worst blue chip stocks on the market right now. If you own shares, sell them immediately — and if you’re an options investors looking for a trading strategy, consider playing the downside on any one of these battered blue chips.
Aluminum Corp. of China (ACH) – This company has been suffering, down about -25% year-to-date, as aluminum priced have been sagging — including one seven month stretch that saw a -60% decline in the metals’ price.
Baxter International (BAX) – Baxter has been right on target with its earnings, but its lack of growth is the real problem. BAX stock has suffered at least three downgrades from Wall Street in the last three months.The blue chip stock has lost -27% year to date with no bottom in sight.
Charles Schwab (SCHW) – If you ask Chuck about his earnings performance, you may get some hand-wringing and embarrassed excuses. SCHW has seen its earnings slump in each of the past four consecutive quarterly reports and that is not an encouraging trend. Charles Schwab is down about -16% year-to-date.
ENI S.p.A (E) – This Rome-based integrated energy company has had a whole lot of trouble making its earnings move in a positive direction, missing the market in two of its last three reports by as much as 23%. Throw in euro zone debt fears and you can understand why this Europe blue chip is down -21% since January 1.
Exelon Corp. (EXC) – Utility companies like Exelon are seen as safe haven plays, with high dividend yields and relatively low volatility. Too bad EXC has gone against the crowd on this front, shedding -16% year-to-date. Though EXC stock has a reasonable PE ratio of around 10, I wouldn’t count on a turnaround any time soon.
France Telecom (FTE) – With a market cap of $50 billion, FTE is a sizeable telecom player with almost 200 million customers. Too bad that like ENI, this Europe blue chip has been battered by debt fears in the euro zone and a lack of growth. With most analysts rating this stock a “hold” or “overweight,” you should consider FTE stock a sell.
Monsanto Co. (MON) – The “frankenseed” company is having trouble maintaining its once dominant place in the agricultural sector. Not only have the comparisons to prior breakout quarters rendered recent earnings pretty shabby when held up next to these numbers, a relatively high PE ratio of 20 has caused many investors to consider this stock still overpriced despite a gut-wrenching 70% flop from its 2008 peak.
Nucor Corp. (NUE) – A mining powerhouse and big name in the steel and iron business, Nucor has waiting for a recovery in construction for what seems like an eternity. Adding insult to injury last week, major flooding forced Nucor to idle two plants in Nebraska, as well as causing the collapse of a railroad bridge that served Nucor in the area. Once the floods subside, NUE will still be taking on water. Sell this blue chip stock.
Total (TOT) – The France-based crude oil giant has been socked with the rest of the energy industry in the wake of the BP disaster, to the tune of -22% lost year-to-date. Total missed forecasts fairly significantly in its last quarterly report, and could be in for another poor showing when it reports again on July 30.
Transocean Ltd. (RIG) – If you didn’t already know about transocean, the BP oil spill has opened up your eyes to this oil service company. With BP angling to hang some of the liability on Transocean for the cleanup, this is an awfully risky investment to hold on to right now. Shares are off -35% since January 1 with no bottom in sight.
Here’s the complete list of these blue chip stocks to sell for easy reference:
|Symbol||Company Name||Sector||Market Cap||Portfolio Grader Grade|
|ACH||Aluminum Corp. of China||Metals & Mining||$10.8||F – Strong Sell|
|BAX||Baxter International||Health Care Equipment||$25.1||F – Strong Sell|
|SCHW||Charles Schwab||Capital Markets||$18.4||F – Strong Sell|
|E||ENI S.p.A.||Oil Gas & Fuels||$71.8||F – Strong Sell|
|EXC||Exelon Corp.||Electric Utilities||$27.3||F – Strong Sell|
|FTE||France Telecom||Telecommunications||$50.2||F – Strong Sell|
|MON||Monsanto Co.||Chemicals||$27.5||F – Strong Sell|
|NUE||Nucor Corp.||Metals & Mining||$13.1||F – Strong Sell|
|TOT||Total S.A.||Oil Gas & Fuels||$111.3||F – Strong Sell|
|RIG||Transocean Ltd.||Energy Equipment||$17.5||F – Strong Sell|
To any shareholders of these stocks afraid to lock in a loss: Simple trading strategies are often the most effective, especially when it comes to blue chips. Don’t worry about PE ratios or the potential of a rebound — just remember that even if one of these stocks jumps 5% in the next few weeks, that’s only good if those returns beat the broader market. If you sell out of these picks and invest in stronger stocks, you will likely make up your lost ground faster than simply wishing and hoping for these blue chips to get back to square. Don’t be emotional about the loss — protect your portfolio and move on with your investing strategy.
As of this writing, Louis Navellier did not own a position in any of the blue chip stocks named here.
About Portfolio Grader: Every Sunday, renowned growth stock expert Louis Navellier runs a fundamental analysis on the top 5,000 Wall Street companies. Armed with this research, Navellier offers a rating for each company reflected as a simple letter grade, with A being “strong buy” and F being “strong sell.” Portfolio Grader’s stock data is free and open to the public and can be accessed online here.