Many stocks are reversing the trends they saw last year.
Dreamstime
The changing of the year to 2023 has brought with it a change in market leadership. Nearly across the board, the most beaten-up stocks of last year have rebounded strongly this year, while 2022’s biggest winners have shed value so far in 2023. But there are a few names that stand out for breaking that pattern.
Among the worst-performing
S&P 500
stocks so far in 2023 is
Enphase Energy
(ENPH), down about 20%. But that’s after a 45% rise in 2022. Northrop Grumman (NOC) is down 15% this year and following a 43% gain last year.
APA
(
APA
) has slid 12% year to date after soaring 77% in 2022.
Meanwhile the list of this year’s biggest laggards so far is littered with energy, consumer staples, defense, and healthcare companies that are coming off of big gains in 2022. It’s a bit of a so-called mean reversion and a sign of investors’ shifting preferences to more growth-oriented and riskier stocks in 2023.
The reverse holds true as well—many of 2022’s worst performers are trouncing the market so far in 2023.
Tesla
stock (TSLA), which lost 65% of its value in 2022, is up nearly 70% year to date.
Align Technology
(ALGN),
Warner Bros. Discovery
(WBD),
Catalent
(CTLT),
Nvidia
(NVDA), and
Carnival
(
CCL
) all lost at least 50% in 2022 and are already up more than 50% in 2023.
| Company / Ticker | 2022 Return | 2023 YTD Return |
|---|---|---|
| Tesla / TSLA | -65% | 70% |
| Align Technology / ALGN | -68% | 57% |
| Warner Bros. Discovery / WBD | -60% | 56% |
| Catalent / CTLT | -65% | 55% |
| Nvidia / NVDA | -50% | 52% |
| Carnival / CCL | -56% | 50% |
| Generac Holdings / GNRC | -71% | 31% |
| Halliburton / HAL | 75% | -4% |
| EQT / EQT | 58% | -10% |
| General Mills / GIS | 28% | -10% |
| Campbell Soup / CPB | 35% | -10% |
| APA / APA | 77% | -12% |
| Northrop Grumman / NOC | 43% | -15% |
| Enphase Energy / ENPH | 45% | -20% |
Source: FactSet
However, the few stocks that haven’t followed the pattern are an idiosyncratic group that could be worth a deeper look.
Pfizer
(PFE), down more than 10% in 2022, has lost another 14% of its value so far this year. That’s on concerns about the fading demand for its blockbuster Covid-19 vaccine and treatment and an uncertain next act. Barron’s sees a contrarian opportunity in Pfizer stock, making it a recent pick.
Spicemaker McCormick (MKC) didn’t keep up with its consumer-staples peers in 2022, losing nearly 13% as elevated costs forced a pair of guidance cuts. The slide has continued in 2023, with the stock down another 10% year to date.
General Mills
(GIS) and
Campbell Soup
(CPB) are similarly down 10% in 2023, but that’s after their stocks surged 28% and 35%, respectively, last year. Perhaps the spice and condiments maker can turn things around in 2023.
Procter & Gamble
(PG) and
Colgate-Palmolive
(CL) are other consumer staples firms that lost value in 2022 and are down so far in 2023.
CVS Health
(CVS) is in the same boat.
Lumen Technologies
(LUMN) tanked 56% in 2022 and has lost another 25% this year, to trade at levels not seen since the late 1980s. The telecommunications company eliminated its dividend and issued lackluster guidance in recent months. A new CEO is working on a turnaround, but investors remain skeptical.
Baxter International
(BAX) is similarly coming off of a tough year for the business and the stock, which lost 40% in 2022. The medical products maker is off to an inauspicious start to 2023, with shares down another 22%. “2023 represents a transition year, as management steps back, regroups, looks at the portfolio, and manages debt,” wrote Citi analyst Joanne Wuensch last week. “To us, admitting the weaknesses is the first step, setting guidance that it can meet is the next, and ultimately executing should drive the stock’s recovery.”
| Company / Ticker | 2022 Return | 2023 YTD Return |
|---|---|---|
| United Rentals / URI | 7% | 31% |
| Steel Dynamics / STLD | 60% | 27% |
| Nucor / NUE | 17% | 27% |
| W.W. Grainger / GWW | 9% | 20% |
| Las Vegas Sands / LVS | 28% | 18% |
| Everest Re / RE | 24% | 15% |
| Omnicom Group / OMC | 16% | 13% |
| Paccar / PCAR | 17% | 12% |
| Colgate-Palmolive / CL | -5% | -7% |
| Procter & Gamble / PG | -5% | -8% |
| McCormick / MKC | -13% | -10% |
| Pfizer / PFE | -10% | -14% |
| Baxter International / BAX | -40% | -22% |
| Lumen Technologies / LUMN | -56% | -25% |
Source: FactSet
On the other end of the spectrum are stocks that outperformed the S&P 500 in 2022’s down market and have kept up their winning ways so far in 2023. Those include a pair of steelmakers:
Steel Dynamics
(STLD) stock jumped 60% last year and has climbed 27% year to date, while
Nucor
(
NUE
) added 17% last year and 27% so far in 2023.
The stocks have followed the price of steel so far this year, as China’s reopening has boosted expectations of demand. But the rally has left both trading at their highest valuation multiples in years.
United Rentals
(URI) rose 7% last year and has gained 31% year to date. Components and labor issues at equipment manufacturers like
Caterpillar
(CAT) and
Deere
(DE) have kept the supply of new machinery tight, increasing the need for rentals. Infrastructure investment legislation has also lifted forecasts of future demand.
Other stocks that have kept their 2022 rallies going this year include
W.W. Grainger
(GWW),
Las Vegas Sands
(
LVS
),
Everest Re
(
RE
),
Omnicom Group
(OMC), and
Paccar
(PCAR).
Write to Nicholas Jasinski at nicholas.jasinski@barrons.com
Credit: marketwatch.com