Comprised of the 503 largest U.S. companies based on market capitalization, the S&P 500 continues to be the yard stick by which most professional investors and traders measure their returns and performance. Year-to-date, the index is up a healthy 11%.
However, the S&P 500 index had been doing a lot better this year before it ran into some turbulence in July, which has spilled over into August. A rotation from technology stocks into value and small-cap names, coupled with fears of a U.S. recession, have pulled the S&P 500 down 5% over the last month with nearly half its constituent stocks in the red for the year.
Some stocks are doing particularly bad and dragging down the index’s performance, not to mention investor portfolios. Here are three S&P 500 stocks to sell in August before they crash and burn.
Warner Bros. Discovery (WBD)
Things have gone from bad to worse at Warner Bros. Discovery (NASDAQ:WBD) after the entertainment company delivered second-quarter financial results that can best be described as a train wreck. Warner Bros. announced a loss per share of 36 cents, which was greater than a loss of 22 cents expected on Wall Street. Revenue in the quarter totaled $9.70 billion, which missed the $10.07 billion that was forecast among analysts.
Worse, the company reported a $9.1 billion write-down on its TV networks as the market value of the television assets fell below the book value. The company’s traditional TV channels that include TBS, TNT and Discovery continue to erode as customers and advertisers migrate to streaming platforms. Warner Bros. Discovery also continues to struggle with a big debt load caused by the 2022 merger of the Warner Bros. film studio and Discovery television network.
As of June 30, Warner Bros. Discovery had $41.40 billion of gross debt on its balance sheet versus $3.60 billion of cash. The company also recently lost its right to broadcast future NBA basketball games to streaming rival Amazon (NASDAQ:AMZN). WBD stock fell 10% the day its Q2 print was released and is down 50% over the last 12 months.
Lululemon Athletica (LULU)
Once mighty retailer Lululemon Athletica (NASDAQ:LULU) is struggling to right its ship amid waning demand and a sales slump. Down 52% on the year, Lululemon is the third worst performing stock in the S&P 500 index currently. The share price hit its lowest level in four years at the end of July on news that the company has halted sales of a new product line it had recently launched.
The company paused sales of its “Breezethrough” yoga wear line so that it can adjust and deliver the best possible product to consumers. The move prompted a slew of downgrades on LULU stock across Wall Street. JPMorgan Chase (NYSE:JPM) pulled Lululemon from its list of “top stock picks.” The halt of the Breezethrough line of clothing is the latest setback for Lululemon.
Management had said that revenue was likely to accelerate in the year’s second half helped by new product launches. That forecast now seems in doubt, making Lululemon an S&P 500 stock to sell.
Intel (INTC)
Chipmaker Intel (NASDAQ:INTC) has the distinction of being the worst-performing stock in the S&P 500 index this year. So far in 2024, INTC stock has declined 58%. The company’s share price plummeted 22% after it announced that it is suspending its quarterly dividend payment alongside extremely weak Q2 financial results. The company had previously paid shareholders a dividend of 12 cents per share each quarter, giving the stock a yield of 1.72%.
News of the dividend suspension was accompanied by Q2 results that missed Wall Street targets. The Silicon Valley-based maker of microchips and processors reported EPS of 2 cents, which was well below the 10 cents expected among analysts. Revenue of $12.83 billion missed a consensus target of $12.94 billion. Sales were down 1% from a year ago. Management also announced that they are eliminating 15% of Intel’s global workforce, equal to about 17,500 positions, as they try to reduce costs by $10 billion.
There wasn’t a single piece of good news in Intel’s latest financial results. INTC stock is now trading 57% below where it was at five years ago.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
