Stocks to Sell – These 5 Big Names Are Flopping Big-Time

by Jeff Reeves | July 10, 2014 7:21 am

It has been a decent year, all in all, for the S&P 500. The benchmark is up about 6.5% year-to-date, and a handful of picks including Micron (MU[1]) and Electronic Arts (EA[2]) are up as much as 50% in 2014.

But after disappointing Q1 numbers and negative guidance the norm[3] for most stocks in Q2, we’ve started to see sentiment shift a bit and a lot more pessimism around the stock market.

Now, pessimism alone doesn’t mean a crash and there are plenty of stocks still at or near all-time highs.

But there is indeed a group of stocks that are struggling now as we enter earnings season, and have momentum working against them big time.

Take these five flops in the S&P as proof:

Delta Stock – Down 13% in the past 30 days

After the merger last year between American Airlines (AAL[4]) and US Airways, it was thought that all carriers would benefit from decreased competition and higher fares. Well, that might have been true a few months ago … but as oil prices have spiked, passenger metrics have fallen[5] and some flights to regions like Venezuela[6] have been curtailed, Delta Air Lines (DAL[7]) has run into some big trouble lately.

Coach Stock – Down 13% in the past 30 days

Coach (COH[8]) is the worst-performing stock in the S&P 500 this year, with a gut-wrenching loss of nearly 40%. But don’t go bargain hunting just yet in this stock, which is clearly cheap for a reason. A huge 21% decline[9] in U.S. same-store sales last earnings report started the descent for this fashionable stock … and fear of continued pressure in the next earnings report has pushed COH stock down materially in the last few weeks, too.

Marathon Petroleum Stock – Down 11% in the past 30 days

One of the many refinery stocks that went on a tear from mid-2012 through the end of last year, Marathon Petroleum (MPC[10]) still is sitting on a tremendous long-term return of 75% over the past two years. However, news that President Barack Obama will start allowing crude oil exports has weighed on this sector big-time recently. That’s because domestic oil has traded at a significant discount to the average global price of crude, and that has led to better margins for domestic refineries like MPC. Going global with U.S. supplies will normalize that spread — and pinch margins at Marathon as a result.

Valero Stock – Down 11% in the past 30 days

Marathon Petroleum’s past success and current troubles are shared by fellow refiner Valero Energy (VLO[11]). The stock has soared 130% in the past two years — well more than double the S&P 500 — but has faded fast in the past 30 days.

Darden Stock – Down 10% in the past 30 days

The pain and suffering of Darden Restaurants (DRI[12]) is well-documented, what with the sale of struggling seafood joint Red Lobster[13] and continued weakness at its Olive Garden chain. Darden has been choppy but stagnant since 2011 … however, in 2014 investors seemed to lose all patience. Shares are down 16% YTD, with much of that coming in the last 30 days as hopes of a turnaround look dim for this struggling restaurant operator.

Jeff Reeves[14] is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks.[15] As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com[16] or follow him on Twitter via @JeffReevesIP[17]. 

Endnotes:

  1. MU: /stock-quotes/MU-stock-quote/
  2. EA: /stock-quotes/EA-stock-quote/
  3. negative guidance the norm: http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_7.3.14
  4. AAL: /stock-quotes/AAL-stock-quote/
  5. passenger metrics have fallen: http://www.marketwatch.com/story/delta-drops-sharply-as-airlines-selloff-continues-2014-07-07?siteid=yhoof2
  6. regions like Venezuela: http://online.wsj.com/articles/delta-to-cut-85-of-its-flights-to-venezuela-next-month-1404767609
  7. DAL: /stock-quotes/DAL-stock-quote/
  8. COH: /stock-quotes/COH-stock-quote/
  9. 21% decline: http://www.ft.com/intl/cms/s/0/2e10647e-cfa7-11e3-bec6-00144feabdc0.html#axzz36tuD3JkS
  10. MPC: /stock-quotes/MPC-stock-quote/
  11. VLO: /stock-quotes/VLO-stock-quote/
  12. DRI: /stock-quotes/DRI-stock-quote/
  13. Red Lobster: http://www.nbcnews.com/business/consumer/lobster-roll-darden-sells-red-lobster-seafood-chain-2-1b-n107111
  14. Jeff Reeves: http://slant.investorplace.com/author/profile/jeff-reeves/
  15. The Frugal Investor’s Guide to Finding Great Stocks.: http://www.amazon.com/dp/B007KB9CSI/ref=rdr_kindle_ext_tmb
  16. editor@investorplace.com: mailto:editor@investorplace.com
  17. @JeffReevesIP: http://twitter.com/JeffReevesIP

Source URL: https://investorplace.com/2014/07/stocks-to-sell-dal-coh-dri-vlo-mpc/