Although it was a pretty good year across the board for stocks — the S&P 500 is up 13%, the Dow Jones up 8% and the Nasdaq up 15% as of this writing — a number of sectors were hit hard by big changes in the past 12 months.
Unsurprisingly, some of the worst stocks in the S&P 500 index include tech stocks that have had difficulty adapting to the mobile revolution and the so-called “post-PC age.” But there also are a number of companies with very specific troubles in leadership, strategy and their overall position in the 21st-century economy.
A few small-caps always flame out every year, but the following list of 10 S&P 500 stocks is noteworthy because of the sheer size of these stocks.
As the saying goes, the bigger they are … the harder they fall.
The utility sector hasn’t been exactly booming this year, with most stocks barely breaking even or posting small declines. but utility Exelon (NYSE:EXC) is the biggest dog of the group because of reports it might cut its dividend. Shares are down more than 30% in 2012, with more than half of those declines coming since September on the dividend cut rumors. Utilities are inherently no-growth plays — they are highly regulated, geographically limited and tied into many factors beyond their control. Without the dividend, there’s not a lot to like … so investors have moved on.
#9: R.R. Donnelley
You might not have even heard of R.R. Donnelley & Sons (NASDAQ:RRD) until the infamous Google (NASDAQ:GOOG) 8-K filing in October that contained a spot for “PENDING LARRY QUOTE.” RRD was the media partner meant to send out the earnings release, but botched the job. The biggest irony is that the error and resulting PR fallout exposed R.R. Donnelley’s biggest weakness — not typos, but the simple fact that information spreads like wildfire easily and cheaply in a digital age. So it’s no surprise that this printing company and communications firm has struggled to adapt to a 21st-century media landscape. Shares of RRD are down about 35% this year.
#8: Pitney Bowes
Those who have been in the media or marketing businesses for a long time are familiar with Pitney Bowes (NYSE:PBI), one of the biggest names in mail, printing and direct marketing. Unfortunately, like R.R. Donnelley, a digital age has rendered a lot of what PBI does obsolete, and that has resulted in a roughly 40% decline so far in 2012. The company continues to try to evolve into a digital marketing company, with website design services and the like. However, revenue continues to circle the drain, and profits are increasingly hard to come by. The company pays a mammoth 13% yield based on previous payouts … but you have to wonder how long that will last, and how hard the stock will crash if the payday is eliminated.
#7: Allegheny Technologies
Never heard of this materials stock? Well, good — because if you had Allegheny Technologies (NYSE:ATI) in your portfolio, you would have suffered an ugly 40% slide or so this year. The diversified metals stock traffics in titanium, steel, iron and a host of alloys. Unfortunately, baseline demand for most metals remains very depressed as industrial production remains under pressure worldwide and soft prices persist for almost every metal commodity out there.
If you want a poster child for the “death of the PC,” Hewlett-Packard (NYSE:HPQ) is as good as any. HP has seen steadily declining sales in its core business as desktop computing, printers and other items that were once its bread and butter continue to see headwinds. Shares have lost almost 45% so far in 2012 as a result. CEO Meg Whitman claims to have a turnaround plan, but be patient … “recovery” is not coming until at least 2014, according to a rather uninspiring plan revealed this fall.
Well, so much for Ron Johnson’s much-anticipated “turnaround” of this one-time retail giant. JCPenney (NYSE:JCP) did away with couponing to start the year — and alienated its entire customer base, resulting in gut-wrenching sales drops and the suspension of the JCP dividend to stop the bleeding. The company continues to backpedal and restructure, but the damage is done with a roughly 45% crash so far in 2012.
#4: Best Buy
The conspiracy theorist in my wonders whether Best Buy (NYSE:BBY) is throwing the fight. After all, founder Richard Schulze made a bid for the company that continues to move lower … making you wonder if he has friends on the inside staying the current course of mayhem simply to help give him a deal. On the other hand, Best Buy doesn’t need some cloak-and-dagger scheme to send it reeling. Painful competition from e-commerce sites like Amazon (NASDAQ:AMZN) coupled with the decline in the sale of items like CDs, laptops and console video games would be squeezing this big-box store either way. BBY is down more than 45% so far in 2012.
#3: Cliffs Natural Resources
Materials stocks are the worst performers as a group among the S&P’s 10 core sectors in 2012. So it’s not a shocker to see iron and coal miner Cliffs Natural Resources (NYSE:CLF) near the top of this list. Shares are off about 50% so far this year as weak coal demand, particularly from Asia, has gutted the industry. Furthermore, weak iron and steel demand persists as the global economy slogs along with only minimal interest in infrastructure, skyscrapers and other areas of big-time steel consumption.
#2: Advanced Micro Devices
It’s a difficult world for PC-focused stocks, as we’ve seen, and chipmaker Advanced Micro Devices (NYSE:AMD) has taken it on the chin worse than most. For starters, it is way behind in the mobile semiconductor arena. It also is way down the list in global semiconductor market share, with a measly 2% reach. To top it off, AMD is not profitable and, despite layoffs and restructuring, has forecast losses for every quarter through fiscal 2013. It’s easy to see why shares have flopped almost 60% so far in 2012.
#1: Apollo Group
The for-profit education sector has been under pressure for a while thanks to a harsh outlook from the White House under Barack Obama and the president’s re-election that will ensure a continuation of those policies. So it’s no surprise that Apollo Group (NASDAQ:APOL) — one of the largest for-profit ed stocks with its University of Phoenix — has been one of the hardest-hit. The Education Department has pushed for tighter regulation of federal student aid disbursed to these institutions and effectively throttled off profits. As a result, Apollo stock has crashed more than 60% despite an up market so far in 2012.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.