Big Stock Losers That May Be Winners

When MarketWatch recently posted a list of the biggest stock losers so far this year, many investors probably decided to avoid them like the plague.  That would have been a mistake.

Many investors, including the great Warren Buffett, argue that the right time to invest in a stock is when everyone else is afraid of it.   Also, it underscores the topsy-turvy nature of the stock market where companies go in and out of favor like hair styles. Remember when Google Inc.  (NASDAQ: GOOG) could do no wrong?  Now, its shares are down almost 13 percent this year as investors worry about the search engine’s spending on neat things such as self-driving cars and wind farms that seem unrelated to related to its core business.  Does this represent a buying opportunity?  Well , that depends on an investor’s patience and fortitude.

The companies that made the July 2 list were because things were not going well and Wall Street was unsure when things would get better.   The cause for concern was understandable in many cases. In other cases it wasn’t.

For example, Wall Street had pushed down the shares of King Pharmaceuticals Inc. (NYSE: KG) because of inventory control problems. One investor that was undeterred was Pfizer Inc. (NYSE:PFE), which today announced plans to buy its smaller rival for $3.6 billion. Many Wall Street analysts had argued that at $14.14, the shares were overvalued and had placed a price target of $11.33 on it. The buyout price was $14.25 a share, indicating that Pfizer is either overpaying for King or sees value in the company that has eluded everyone else.

Some stocks such as Anadarko Petroleum Corp.  (NYSE: APC) and Diamond Offshore Drilling Inc.  (NYSE: DO) were hit by concerns about the impact of the now-expired drilling moratorium.  Shares of Nvidia Corp. have taken a hit because the graphics chip company continues to hemorrhage market share. It was one of the few stocks on the MarketWatch list that analysts are not expecting to rise.

Worries about the economy have depressed shares of AK Steel Holding Corporation (AKS), which recently issued disappointing earnings guidance, Alcoa Inc. (NYSE: AA) and Office Depot Inc. (NYSE:ODP) while Monsanto Corp. (MON) has taken a hit amid concerns about that more weeds are growing resistant to its Round-Up product. Disappointing earnings guidance pushed down shares of Dean Foods Inc. (NYSE: DF) while worries about stent sales are depressing shares of Boston Scientific Corp. (NYSE: BSX). Most analysts see little chance of a recovery.

Even the worst sports teams do have fans that like to root for the underdog. The trick for many investors is not letting their sentiment to “adopt” a stray puppy of a stock cloud their judgment.

Below are the stocks on the MarketWatch list along with analysts’ mean price targets and their trading prices as of yesterday:

Nvidia Corp.  (NASDAQ: NVDA) $11.02  (mean) $11.41 (price)

Dean Foods (NYSE: DF) $12.30 (mean) $10.33 (price)

AK Steal  (NYSE:AKS) 16.33 (mean)  $14.50 (price)

Monsanto Co.  (NYSE: MON) $60.96 (mean)/ $52.25 (price)

Anadarko Petroleum Corp.  (NYSE: APA) $71.63 (mean)/ $58.30 (price)

King Pharmaceuticals Inc. (NYSE: KG)  411.33 (mean)/ $14.14 (price)

Alcoa Inc. (NYSE:AA) 13.20 (mean)/ $15.60 (price)

Office Depot Inc. (ODP)  $6.04 (mean)/ $5.02 (price)

Diamond Offshore Drilling $67.78 (mean)/ $69.37 (price)

Boston Scientific -35.6%  $6.77 (mean)/ $6.13 (price) $8.50