These are the stocks you wish you would have shorted on Monday.Â
In a week where the stock market soared to new heights, it’s crucial to remember that not every stock shared in the glory. Understanding which stocks underperformed and why is just as important as celebrating the winners. It gives us a clearer picture of the market’s overall health and helps us make more informed decisions.
Perhaps the real winners this week were the investors who astutely shorted these stocks, capitalizing on their declines. Here’s a look at this week’s notable laggards:
1. Oracle (ORCL): A Missed Forecast Leads to a Sharp Decline
Oracle, a renowned name in software, experienced a significant setback this week. The company’s stock plummeted by 11% following a quarterly revenue that fell short of expectations. This drop marks one of the most substantial declines for Oracle within the year, highlighting the impact of financial performance on stock prices.
2. Exelon (EXC): Regulatory Roadblocks Trigger a Slide
Exelon’s stock witnessed a 9% fall after the Illinois Commerce Commission rejected the integrated grid plans from Ameren Illinois and ComEd, both subsidiaries of Exelon. The decision, based on non-compliance with the Climate and Equitable Jobs Act, underscores the influence of regulatory actions on stock values. The utilities now face a three-month deadline to revise and resubmit their plans, focusing on affordability, environmental justice, and state goals.
3. Cardinal Health (CAH): Underweight Rating and Contract Concerns
Cardinal Health’s shares closed 8% lower this week, impacted by Wells Fargo’s initiation of coverage with an underweight rating. The downgrade stems from concerns about Cardinal’s contracts with UnitedHealth’s Optum Rx. With Optum Rx reportedly preparing to handle some specialty distribution internally, Cardinal Health faces potential challenges to its earnings and growth prospects, especially with a critical contract renewal looming in June 2024.
4. Arch Capital Group (AGCL): A Dip Despite Strong Fundamentals
Arch Capital Group, a global insurance provider, saw its stock decrease by 8%. Despite this, Zach’s Investment Research has highlighted AGCL as a “top growth stock for the long-term,” citing its strong Growth Style and VGM Scores, along with a Zacks Rank #1 (Strong Buy). This week’s price drop poses a question for investors: Is this an opportune moment to invest in a fundamentally strong stock at a lower price?
Each of these stocks tells a story beyond mere numbers. They remind us that market dynamics are complex and influenced by a variety of factors, from financial results and regulatory decisions to analyst ratings and contract negotiations. As investors, keeping an eye on these underperformers is key to understanding market risks and opportunities.
