5 Worst-Performing S&P 500 Stocks of 2011
BOSTON (TheStreet) -- The S&P 500, the most followed benchmark for U.S. equities, has risen a paltry 1.1% this year. What's worse, the index has fallen 7.2% from its 52-week high, which was reached two months ago, though many stocks have dropped even more.
Technology has been the worst-performing sector. Semiconductor bellwether Micron (MU) tumbled 14% June 24, following a weaker-than-expected earnings report, and Oracle (ORCL) declined 4% as its hardware unit's sales missed analysts' estimates. With the S&P 500 trading at its cheapest level in months, the laggards merit attention.
The following five stocks have been the worst-performing S&P 500 companies so far this year. Most are selling at extremely cheap prices as fundamentals, such as sales growth, have deteriorated amid a so-called soft patch in economic growth.
Investors, concerned about these companies' future performance, have abandoned the stocks. Although their concerns may prove to be justifiable, pessimism provides an opportunity for those who think the equity market will rebound along with economic growth.The following five stocks are worthy of consideration. 5. Tellabs (TLAB) is a communications-equipment maker, building access products for broadband and offering network consulting services. Tellabs swung to a first-quarter adjusted loss of 3 cents a share, missing analysts' forecasts, albeit marginally. Sales dropped 15%, also missing the consensus, sending Tellabs' shares down 9% in reaction. Tellabs is pouring money into mobile Internet research and development, boosting investment 16% in the first quarter, now equivalent to an eye-catching 25% of sales. While management is taking aggressive action, such action suggests that the current product portfolio is waning in relevance, hurting sentiment for the stock, which has now bounced up 11% from a 52-week low. Of the 23 analysts covering Tellabs, just two advise clients to purchase its stock. Tellabs ranks as one of the worst-rated stocks in the S&P 500. It is notably cheap, selling for a book value multiple of 0.8, a sales multiple of 0.9 and a cash flow multiple of 10. But, value is no guarantee of performance. Analysts forecast a second-quarter adjusted loss of 2 cents a share and a 20% drop in sales, presenting risk. Tellabs has plummeted 35% in 2011.
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