5 Worst-Performing S&P 500 Stocks of 2011

BOSTON (TheStreet) -- The S&P 500 Index is rising for the third year in a row, increasing 7% so far in 2011. The best performers are National Semiconductor (NSM), Biogen Idec (BIIB) and H&R Block (HRB). But not all of the benchmark index's components have fared well. The following five companies have the worst-performing stocks this year. At least two 2010 leaders have turned into laggards. Opportunistic buyers should take a look at these equities as several have fallen to attractive discounts. Here's a closer look at the stocks.

5. F5 Networks (FFIV) designs software that optimizes network-based applications.

Part of the cloud-computing movement, F5 has been one of the fastest-growing companies and best-performing stocks during the recovery. It has increased sales and net income 20% and 42%, annually, on average, since 2008 as its stock produced an annualized gain of 70%. It surged 145% in 2010, but has dropped 19% in 2011.

Fiscal second-quarter adjusted earnings advanced 66% to 87 cents, beating analysts' consensus estimate by 1.9%, sending F5 shares up 7.2% in reaction. Sales met expectations. The gross margin widened from 83% to 84% and the operating margin jumped from 24% to 30%, amplifying the bottom line. F5 has $475 million of cash and no debt, for a quick ratio of 1.8. Investors, recognizing solid fundamentals, have bid the stock up to a premium multiple.

F5 trades at a trailing earnings multiple of 44, a forward earnings multiple of 25, a book value multiple of 7.8 and a cash flow multiple of 25, significant mark-ups to peer and market averages. However, its PEG ratio, which discounts growth expectations, at 0.5 indicates that F5 has fallen to bargain territory, selling for a 50% discount to estimated fair value. Of analysts following F5, 56% advise purchasing its stock, which has a median target of $128, suggesting solid upside.

1 2 3 4 5 Next › Last »