Bulls usually win over bears in the long-term. Can long-term value win over growth?

Being a value investor can be quite boring or even painful when the stock market is rising month after month. Rising tides are said to lift all boats, but in a bull market most buy individual stock investors really want to own growth and the themes that are working. And trying to outsmart the so-called “smart money” is no easy task. The Dow Jones Industrial Average was last seen up almost 5% year-to-date in May, only about half the gain of the larger and more relevant S&P 500. As of May 14, 2024, there were 10 Dow stocks that were still down year-to-date. And four of these Dow stocks are extremely negative versus any acceptable index metrics.

Tactical Bulls wants to see if the Dow’s sloppiest stocks of 2024 offer any real value for long-term investors. Getting a Dow stock with major performance issues to turn around on a dime is not realistic. Turnaround stocks that have been in business for decades can sometimes take years to turnaround. A history of Dow stocks over the decades has proven that many formerly great companies have imploded and faded into oblivion. And some turnaround stocks just refuse to turn around in the right direction. These reasons are why this focus is for long-term views only.

Screening stocks for an index’s worst performers over any given time period is dangerous. Some investors believe that stocks hitting their 52-week lows are likely to keep hitting more 52-week lows. And in a market that is still considered to be in a bull market it should also be pointed out that 12 of the 30 Dow stocks are up over 10% so far this year. And 8 of them are up 15% to 27%.

This tactical bull review of the 4 worst Dow stocks of 2024 is not intended to tell investors to buy any of these stocks now. It is also not intended to tell investors they better sell while they can. The ultimate “Buy, Sell or Hold” decision is up to each investor.

This review looks at long-term fundamentals, valuations against forward earnings estimates, trading ranges, analyst expectations, and even dividends. A synopsis of what has happened and what needs to happen to get back on track have also been included. Now let’s see what the stock market’s tea leaves and chicken bones have to say about the worst performing Dow stocks of 2024.

INTEL LOST ITS PING

Intel Corporation (NASDAQ: INTC) was last seen down over 39% year-to-date. Much of the bad news should have been assumed with the trends of 2023 and 2024 being so heavily concentrated in artificial intelligence over traditional computing. Intel is lagging greatly there, but the ongoing financial carnage is on the losses in its foundry unit being larger and lasting longer than expected. Perhaps the scariest part of Intel being down over 39% so far in 2024 is that the shares are still up over 5% from a year ago.

Intel was last seen trading at $30.51, but its shares had dipped back under $30 in recent days. Intel has a 52-week trading range of $26.86 to $51.28 and a consensus analyst price target of $36.63. Intel’s dividend yield, even with shares this low, is just 1.64% — and that is after slashing its payout nearly two-thirds (from $0.37 to $0.13 per quarter) in 2023. Intel may look cheap at 15-times expected earnings but the earnings expectations have come down and many analysts and investors worry how relevant Intel will can keep itself in an AI-going world.

Intel’s analyst brigade has been cutting estimates and price targets heavily since the first quarter earnings fiasco around the foundry. Even when the analysts were defending shares in January with Buy and Outperform ratings those “defensive” calls still came with lower price targets. No significant analyst upgrades have yet been seen “pounding the table” over Intel’s value.

BOEING DOESN’T FLY HIGH

Boeing Co. (NYSE: BA) was last seen down 31.5% so far in 2024. Fortunately, its latest woes didn’t lead to crashes and fatalities. Still, the door blow-out has been only one issue for quality control. This has led to many delivery delays and order tempering as well. While it’s down so much now this is down only 11.6% from a year ago.

Boeing was last seen at $178.44 and it has a 52-week trading range of $159.70 to $267.54. Boeing’s consensus analyst price target was still up at $207.94. As Boeing has been conserving cash after its 737-MAX crash woes and after orders vanished during the pandemic, Boeing hasn’t paid a dividend since 2020. It hasn’t been repurchasing shares for even longer than that. Boeing is difficult to apply traditional earnings metrics because the company remains in an earnings desert. Maybe that new management team is the answer.

The analyst community remains cautious on Boeing. Recent analyst downgrades in April were preceded by Analyst downgrades since the start of 2024. And the analysts who dared to defend Boeing’s “value” still lowered their price targets. Maybe Boeing’s new leadership should call everyone in and ask to be valued only as a defense stock rather than an airplane maker.

DOES NIKE’S SOLE NEED RETREADING?

NIKE Inc. (NYSE: NKE) has been in an ongoing battle for consumer spending around the world. With a drop of 24.1% so far in 2024, NIKE is still down about 13.3% from a year ago. Long-term investors have stayed around because they can remember even in 2021 when NIKE shares soared to $170. Will a 2% layoff to save $2 billion over 3 years help? Will the DTC strategy woes be reversed? Will streamlining its support and operating functions help? Will marketing, wholesale efforts and product innovation work? Will Caitlin Clark help sales? NIKE and many athletic apparel and footwear companies are also caught in the crosshairs of a weak consumer due to higher prices.

At $92.72, NIKE has a 52-week trading range of 88.66 to $123.39 and a consensus analyst price target of $101.11. NIKE’s dividend yield is still just 1.6%. Maybe it just needs people buying more footwear and apparel again to just 24-times forward earnings.

So far in 2024, BofA is the only major firm to stick its neck out with a NIKE stock upgrade to Buy. That came with a price objective hike from $110 to $113. Most analysts who have maintained NIKE’s Buy or Outperform ratings have done so with lower price targets.

WHEN DINNER AT MCDONALD’S IS EVEN EXPENSIVE

McDonald’s Corporation (NYSE: MCD) was fourth on the list with a drop of 8.5% year-to-date. McDonald’s used to be a defensive stock insulated from consumer woes. That was then. Have you hit the drive-thru or gone in and ordered for you and two kids lately? The wage pressures, higher input costs, and the desire to keep margins healthy have all culminated into a process where McDonald’s even feels expensive to consumers. McDonald’s is now going to have to automate even more jobs away to cut costs, but will the company then lower prices to make their menu more affordable again?

McDonald’s was last seen at $271.32. Its 52-week trading range is $245.73 to $302.39 and its consensus analyst price target was still up at $293.47. McDonald’s current share price generates a dividend yield of 2.46%. If McDonald’s customers are feeling heat, does 20-times forward earnings help draw investors in? At least it raised its dividend payout by 10% in late-2023.

Analysts have historically had Buy and Outperform ratings on McDonald’s. That is still the case, but since the start of 2024 both Argus and BTIG abandoned their Buy ratings with downgrades. And since the start of April, 13 analyst teams have cut their price targets. What happens when (or if) those analysts who have refused to downgrade the golden arches finally capitulate with formal downgrades rather than just price target cuts?

*******

It is very difficult for a tactical bullish call to be issued on any stock that is performing poorly when so many stocks and themes are working right now. After all, the consumer feels tapped out. The jobs market isn’t as strong as it was. And the Federal Reserve’s ability to lower interest rates after 11 hikes is challenged by persistent and pesky inflation. And most bull market investors would probably just ask value hunters why they are trying to outsmart the themes that are working now. Then again, the meme stock craze has even come back into play. Financial markets continue to prove that anything is possible. Oh, and the “Efficient Market Hypothesis” should never be relied upon with any strong convictions.