Investors may wish they'd followed the old market cliché of "sell in May, and go away," as the market continued to fall in June 2010. Although the indexes did bad enough, there were many large capitalization stocks that did much worse. This list was dominated mostly by retailers whose earnings reports during the month might have reflected the first weaknesses in the consumer due to the double dip mentality starting to form in the United States. (Find out more in Dangers Of A Double Dip Recession.)
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Anadarko Petroleum (NYSE:APC) fell 30% in June due to its partial non-operated interest in the BP (NYSE:BP) Macondo well that blew out in April 2010. The market is clearly petrified of whether Anadarko Petroleum will be held liable for its share of the cleanup costs and fines, and what the ultimate liability will be for the company.
Best Buy (NYSE:BBY) fell 19% in June continuing the company's long descent from the 52 week high reached in April 2010. Best Buy missed on earnings and revenue guidance when the company reported its quarter during the month, coming in at 36 cents per share compared to consensus of 50 cents per share. Unfortunately for investors, the earnings miss fit in perfectly with the market's preconceived notion of a double dip in the economy. Even the announcement by the company of a 7% increase in its quarterly dividend couldn't arrest the poor performance during the month. (Read more analysis on Best Buy in Is Competition Eroding Best Buy's Business?)
Walgreen (NYSE:WAG) also had a poor June, falling 17%. The company reported earnings during June, and missed estimates due to higher costs on its store-remodeling program. The company plans to eventually renovate 1,200 stores under this program.
Earnings were also the culprit at Carnival Corp. (NYSE:CCL), which fell 17% during the month. The company provided guidance for its third fiscal quarter that was below the consensus estimate of $1.53 per share. The company did report a 2% increase in net revenue yield in the quarter, the first positive one since 2008. Carnival Corp reported higher strength in its North American business relative to Europe. (Examining how a company makes money can offer clues to its earnings potential, check out Revenue Projections Show Profit Potential.)
Lowe's Companies (NYSE:LOW) also lost 17% of its value in June 2010. The market has the perception that the home improvement industry derived a benefit from the tax credit for homebuyers, and now that this government largess has expired, the companies will see a decline in business. Lowe's management also sounded a cautious note on the consumer during several conference presentations during the month, and this might have also spooked some investors.
The list of the worst performing large capitalization stocks during June 2010 was dominated by retailers, as investors have started to flee stocks leveraged to the consumer.
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