The S&P 500 has hit record levels this year and many stocks have generated fantastic returns for investors. But there’s been no shortage of struggling investments, either. Many companies that have been finding it difficult to grow and that may not have any near-term catalysts on the horizon have seen their shares fall sharply this year.
Among the S&P 500’s worst performers thus far in 2024 are Walgreens Boots Alliance (NASDAQ: WBA), Moderna (NASDAQ: MRNA), and Intel (NASDAQ: INTC). Below, I’ll look at just how badly they are doing this year, why their stock prices are in the dumps, and how likely it is that they’ll be able to turn things around.
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There are three key reasons why pharmacy retailer Walgreens Boots Alliance has been a bad investment this year; the company faces an uncertain future ahead, it has posted losses in three of its past four quarters, and it cut its dividend at the start of the year. There hasn’t been a whole lot of reason to remain positive around the business, and that’s evident through its crashing stock price.
As the worst-performing stock on the S&P 500, Walgreens may appear to be a tempting contrarian pick for investors. However, for the stock to recover, new CEO Tim Wentworth will need to show that the business has not only a path back to profitability, but also long-term growth. Amazon is rolling out same-day delivery for prescriptions in more markets and that may only strain Walgreens’ already thin margins even further. Meanwhile, Walgreens’ healthcare strategy of opening clinics hasn’t been paying off and it may end up abandoning it altogether.
There are too many risks and question marks surrounding Walgreens today to make it a good buy and unless Wentworth can come up with a strategy to change that and convince investors that the company is able to grow (while turning a profit), I wouldn’t expect the stock to rally.
COVID vaccine maker Moderna has erased the gains it amassed during the pandemic and is back to trading where it was in early 2020. The problem with Moderna is that with the government no longer loading up on COVID vaccines, there’s a lot of doubt as to how much revenue the company will generate in the years ahead. Its sales fell by 64% last year, to $6.8 billion.
Moderna has diversified and is developing other drugs and vaccines, but there’s nothing terribly exciting there to get investors bullish on this once-popular healthcare stock. It’s developing updated COVID shots and flu vaccines, but the company needs something with a lot more potential in the long run to be a game changer for its business. Relying on COVID sales simply hasn’t paid off for the company.
Things could turn around for Moderna if the personalized cancer vaccine (mRNA-4157) it has been working on with Merck obtains approval. That’s in phase 3 trials and if there’s encouraging news surrounding that, investors could start to feel a bit more enthusiastic about the stock. But cancer treatments have historically had high failure rates so investors shouldn’t keep their hopes too high.
For now, Moderna remains a risky option as COVID sales could continue to decline and it has incurred an operating loss for three straight periods.
Intel has lost a little more than half of its value this year as investors recognize the significant challenges ahead for the business. The company’s revenue has been declining and while building out its foundry business could be a promising long-term growth opportunity, it has been a largely unprofitable venture thus far.
In the three-month period ending Sept. 28, Intel’s foundry segment incurred a loss of $5.8 billion, which was worse than the $1.4 billion loss it posted in the prior-year quarter. And the segment’s sales were also down 8%.
For the company to turn things around, Intel needs to demonstrate to investors that its foundry business can be profitable, and that there’s significant demand out there. Investors have some big doubts about whether investing into chipmaking will pay off for Intel, hence its disastrous stock performance this year.
The safest options for investors at this point would be to wait on the sidelines as this is yet another business that has struggled with profitability in recent quarters.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Intel, and Merck. The Motley Fool recommends Moderna and recommends the following options: short February 2025 $27 calls on Intel. The Motley Fool has a disclosure policy.
