September has historically proven to be a challenging month for stock investors, and 2023 was no exception.
The S&P 500 experienced a 5% decline, while the Dow Jones Industrial Average shed 4%, and the Nasdaq Composite lost 6%. However, amidst this market turbulence, there might be hidden gems for long-term investors willing to brave the storm.
Let’s take a closer look at the three worst-performing S&P 500 stocks in September to determine if there are opportunities worth exploring.
FMC Faces Turmoil
FMC (FMC -1.13%), a manufacturer of insecticides, pesticides, and fungicides, encountered a challenging month with its shares plummeting by a staggering 23%. The primary catalyst behind this dramatic decline was a report from a short-seller that accused FMC of misleading investors regarding generic competition in key markets like China, India, and Brazil.
The report also highlighted a 30% year-over-year decline in FMC’s revenue, attributed to falling agricultural prices and the looming threat of increased generic competition. FMC has contested these claims, stating that the report contains inaccuracies and misinformation.
Given the uncertainty surrounding FMC’s situation, investors may want to approach this stock with caution and consider waiting for more clarity before getting involved.
Dollar General’s Struggles
Dollar General (DG -2.00%), a popular bargain retailer, faced a challenging September as its stock dropped by 19%. The major setback was its disappointing second-quarter earnings report, marking the fourth consecutive earnings per share (EPS) miss.
The company also lowered its full-year sales and profit forecasts for the second time in 2023. Dollar General’s gross margins took a hit, falling by 1.26% to 31%, with inventory “shrink” (a term for theft) contributing to the decline. The company also cited increased competition from retail giant Walmart as a potential headwind in the coming months.
While some may view this as a potential turnaround opportunity, the challenges Dollar General faces in the current retail landscape, coupled with the possibility of a looming recession, may make other investment options more appealing.
Align Technology’s Positive Outlook
In contrast to the woes of the other two stocks, Align Technology (ALGN 1.59%), the maker of orthodontic teeth-straightening appliances, had a relatively positive year-to-date performance, with shares up by an impressive 33%. September, although challenging for the broader market, did not bring any significant negative catalysts for Align Technology.
The company did announce the acquisition of Cubicure GmbH, a 3D systems company, for 79 million euros, aimed at scaling production of custom teeth-straightening aligners and dental appliances. Looking ahead, analysts anticipate Align Technology generating $4.4 billion in sales next year, with EPS expected to rise by 18% to $10.40 per share.
While the stock carries a relatively expensive valuation, with shares trading at a price-to-sales multiple of 5.8, it remains an attractive option for growth-oriented investors.
Evaluating Investment Opportunities
As September’s market turbulence subsides, investors should tread carefully when considering the worst-performing S&P 500 stocks of the month. While FMC grapples with allegations and Dollar General faces retail challenges, Align Technology stands out as a potential opportunity with solid fundamentals and a positive growth outlook.
However, it’s crucial for investors to conduct thorough research and evaluate their risk tolerance before making any investment decisions in these uncertain times.
