The best performing stocks in the S&P 500 in the past year have
been Netflix, Micron Technology, Best Buy, Delta Airlines and
Constellation Brands.
The interesting thing about these stocks is that as investors came
into the year, they were not on anyone’s list of top performers or even
likely winners. Most of them were on the worst performing list for 2012
and with the exception of Netflix, there was very little market buzz or
chatter about any of these stocks.
The rest of the top ten performers include names like Pitney Bowes
and Boston Scientific, whose very existence was being questioned by many
as 2013 began.
It would just seem to make sense to take a look at those stocks in
the index that have lagged the recent rallies and may be poised for a
strong recovery over the next 12 months. When looking at the index
stocks, it becomes clear that if you dig stuff out of the ground, your
stock has not done very well in the past year. Miners of all types of
metal and coal have done very poorly as have many energy companies that
drill for oil and gas.
The worst performing stock over the past 52 weeks has been Newmont Mining (NYSE:
NEM).
The company is one of the world’s largest producers of gold and also
has copper mining operations around the world. The company has
operations in the United States, Australia, Peru, Indonesia, Ghana,
Bolivia, New Zealand and Mexico as well as development projects in West
Africa. The stock has fallen by 46 percent in the past year as gold has
lost some of its luster with investors.
The stock is now trading right at tangible book value, something that
has not happened in the last decade or so. At this level, the shares
have become fairly cheap and any positive developments in gold markets
could send the share shooting higher over the next year.
Cliffs Natural Resources (NYSE:
CLF) is the second worst performer of the year with the stock down 38 percent.
The stock is certainly cheap, trading at just 60 percent of its
tangible book value. The concern here is that the global iron ore market
is suffering from oversupply and it is simply going to take some time
for the weak global recovery to work off the excess. If the market for
iron ore and metallurgical coal should firm quicker than analysts
expect, then this stock could be a top performer in 2104.
Long term investors should note that the recovery prospects for this
stock over the next five years are extraordinary. Excess supply in the
market is going to eventually lead to a decline in capacity, as smaller
and marginal mining facilities are unable to stay in business.
Peabody Energy (NYSE:
BTU) is the world’s largest publicly traded coal company and has been hurt by the secular decline in US coal usage.
What investors may be overlooking is that coal demand globally is
increasing and the company is well positioned to serve the export
markets. The Australian operations in particular are in a good position
to serve what will be fast growing demand from Asian and emerging market
economies that do not have the hostile political and regulatory issues
that coal face in the United States.
The company trades at 1.1x book value and with the exception of a
decline below book value for a brief period last year, this is the
lowest multiple of asset value the shares have reached in the last
decade. Earnings could rebound sharply next year and turn this losing
laggard stock into a market leader. As with Cliffs, the long term
recovery possibilities in Peabody Energy shares are exceptional.
It was the poet Horace who observed, “Many shall be restored that now
are fallen and many shall fall that now are in honor.” Nowhere is this
more true than in the stock market, which why Ben Graham had it as the
prescript for Security Analysis.
The list of top performers may be more exciting, but the list of
worst performing stock may be a more profitable hunting ground for
investors.
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That
margin debt just soared to new all time highs in december should come
as no surprise to anyone. However what may come as a shock to many is
that the other key metric provided by the NYSE - total net free credit -
also known as investor net worth (calculated as Free Credit
Cash plus Credit Balances in Margin Accounts less Margin Debt) just
dropped to a whopping $148 billion, double where it was in February
2013, and double where it was during the peak of the last stock (and
credit and housing) bubble, when it rose to a then-all time high of $79
billion in June 2007. It was all downhill from there.
Today
London metals trader Andrew Maguire told King World News that the
physical gold buying which took place in London on Thursday can only be
described as “stunning.” He also said this terrified the shorts and
created the panic spike in gold that shocked many market participants
that day. Maguire also described what is happening the scenes in the
war on gold, and with gold demand in his remarkable interview below.
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