The S&P 500 has had a strong run in 2023, posting a 13% gain thus far, but not every stock in this broad-market index has shared in the success.
In this article, we’ll delve into the four worst-performing stocks on the S&P 500 this year and explore whether there might be potential buying opportunities amidst their struggles.
Dollar General’s Disappointing Year
Dollar General (DG) has had a forgettable year, with its stock plummeting by a staggering 56.2%. The primary culprits behind this decline have been a series of disappointing earnings reports. The company’s core low-income customer base has been hit hard by inflation, and Dollar General is losing market share to formidable competitors like Walmart.
On June 1, Dollar General experienced its worst day of the year when its stock tumbled by 19.5% due to a first-quarter earnings report miss. The company not only failed to meet estimates but also lowered its guidance for the year while highlighting the ongoing financial struggles of its customer base. The second-quarter earnings report confirmed these expectations, causing the stock to drop by another 12%. Despite the challenges, Dollar General’s widespread presence and limited direct competition suggest long-term potential, but a macroeconomic recovery may take several quarters.
Enphase Energy’s Slide
Solar storage specialist Enphase Energy (ENPH) has also seen its stock decline by 54.3% throughout the year, primarily due to disappointing earnings reports. On April 26, the stock fell by 26% following a flat first-quarter revenue growth and a sequential decrease in adjusted earnings per share from $1.51 to $1.37. Weak U.S. revenue, down 9% due to seasonality and macroeconomic conditions, added to the company’s challenges.
Interest rates and new regulations in California have weighed on performance, but the company’s strong profit margins and its potential to benefit from the long-term growth in solar make it an intriguing option for risk-tolerant investors.
SolarEdge Technologies Faces Headwinds
Another solar player, SolarEdge Technologies (SEDG), has had a tough year, with its stock down 53.5%. The company specializes in power optimizers that convert solar panel energy into electricity and monitor panel performance.
Recent earnings reports revealed weak guidance, attributing challenges to high interest rates and sluggish growth in the residential solar market. Sequential revenue growth of just 5% and expectations of a third-quarter decline have further pressured the stock. While interest rates remain a concern, SolarEdge holds substantial long-term potential.
Insulet’s Battle with Competition
Insulet (PODD), an insulin-delivery specialist, rounds out the list of worst-performing S&P 500 stocks in 2023, with a decline of nearly 50%. The emergence of new diabetes medications prescribed for weight loss, such as Ozempic and Wegovy, has raised concerns about competition impacting Insulet’s Omnipod sales.
However, the company has achieved solid growth, with revenue up by 32.4% to $396.5 million, mainly driven by Omnipod sales. While competition remains a key challenge, Insulet could see a significant rebound if it successfully navigates these waters.
Assessing the Investment Landscape
The S&P 500’s worst performers in 2023 present a mix of challenges and potential opportunities. Dollar General and Enphase Energy face difficulties but hold long-term promise, while SolarEdge Technologies may remain impacted by interest rates but maintains strong growth potential. Insulet contends with competitive pressures but continues to demonstrate solid growth.
For investors, these struggling stocks may warrant consideration as potential turnaround candidates, but thorough research and risk assessment are crucial before making any investment decisions.
