As the second trimester of the year passes a look at the S&P 500 ($GSPC) shows it has performed solidly, gaining 12.02 percent on the year. But some components of the index have performed less than admirably, with some outright tanking on the year.
Like Tolstoy said about unhappy families, every floundering company is floundering in its own way. With that in mind, here’s a closer look what exactly went wrong for the five worst-performing stocks on the S&P 500 this year.
Stocks listed in ascending order of awfulness:
#5: The Mosaic Company (MOS)
Current Price: $41.70
2013 Loss YTD: 25.70 Percent
This Plymouth, Minn.-based mining company mines two specific “crop nutrients” – phosphate and potash. These nutrients are vital to producing commercial fertilizer and the company thrived during the early aughts economic boom.
However, investor speculation and a failed joint venture have rocked the company. The mining company rose over 10 times in value following an investment frenzy spurred by their enormously profitable business model. The stock bubble crashed after the artificially high stock price – which reached $163.30 in 2008 – could not be sustained.
Investors in the company were dealt a significant blow in July when a joint venture between the world’s two largest producers of potash splintered, negatively affecting prices of the mineral and sending Mosaic’s stock southward. Mosaic has so far failed to recover, and has lost significant value this year.
#4 Newmont Mining Corporation (NEM)
Current Price: $31.71
2013 Loss YTD: 30 Percent
Newmont is the world’s second largest producer of gold, churning out 5.4 million ounces of the precious metal a year and holding 93.5 million in reserves. But with gold’s tanking price this year it should serve as no surprise this company has lost significant value on the year.
The Greenwood Village, Co.-based company also mines copper and silver, but gold has always been their bread and butter. Being so closely tied to the precious metal has drastically lowered the company’s value, as gold has lost one-fifth of its value.
Though gold has rallied as of late, it’s hasn’t been enough to pull Newmont out of the basement of the S&P 500.
#3 Peabody Energy (BTU)
Current Price: $17.15
2013 Loss YTD: 34.45 Percent
This coal mining company has been rocked by government insistence that the country wean itself of off coal. Coal still supplies 40 percent of the nation’s energy needs, but this is lowest number than since the Industrial Revolution. That number is expected to continue dropping for the foreseeable future.
Peabody is the largest private producer of coal in the world, with 28 mines throughout the US and Australia producing over 100 million tons of coal a year. Though China is expected to continue to be a major importer of coal to supplement their energy needs, domestically coal’s future looks dire. The Obama Administration has committed to moving away from the highly-polluting energy source, going as far as to declare a “war on coal.”
#2 JC Penney (JCP)
Current Price: $12.39
2013 Loss YTD: 37.09 Percent
The beleaguered retailer went through monumental shake-up this year, and came out of it badly battered and deeply embarrassed. After activist investor Bill Ackman bought heavily into the struggling department store, he used his newfound clout to install former Apple Inc. (AAPL) executive Ron Johnson in as CEO. Following the installation of Johnson, Ackman declared that JHC Penney’s true value would be realized, and predicted that the stock would double or even triple in value.
To say he was wrong would be an understatement to the extreme. Johnson’ policies backfired horribly, and the company alienated loyal customers and hemorrhaged money. The board fired Johnson, re-installed his predecessor, and looked to reverse the damage done.
Ackman finally gave up on the investment, withdrawing his hedge funds’ investment. But the damage has already been done.
… and the worst performing stock in the S&P 500 so far this year is:
#1 Cliffs Natural Resources (CLF)
Current Price: $20.87
2013 Loss YTD: 44.64 Percent
As with Peabody, Cliffs has been hammered by the country’s move away from coal. But this manufacturing and mining company is also engaged in iron ore production, and has been hammered by rising costs and flattened sales for the mineral.
The Cleveland-based company is saddled with debt, and was hurt by a disappointing second quarter 2013 earnings report. Like Peabody, the company is hoping that the continued growth of China and resulting increase in demand for coal can keep the company afloat. But for the time being, the market isn't buying it.
Even though the stock has gained 8.15 percent on the month, it’s not enough to keep Cliffs from being the last eight month’s worst performing stock in the S&P 500.
(image courtesy of WIkimedia Commons)