CVX, XOM, KO, and V are notoriously poor performers during the month of January
Earlier this week, we looked at the
top 25 January stocks on the S&P 500 Index (SPX) over the last decade, where homebuilders and healthcare names dominated. Interestingly, in turning to the worst stocks to own over the past 10 years, five of the 25 are actually blue chips. Below, we'll take a closer look at four of these Dow stocks:
Chevron Corporation (NYSE:CVX),
Exxon Mobil Corporation (NYSE:XOM),
The Coca-Cola Co (NYSE:KO), and
Visa Inc (NYSE:V).
Before diving in, here's the full list of the 25 worst January stocks on the SPX over the last decade. Data comes courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.
Chevron Corporation (NYSE:CVX)
Oil major CVX has been pretty dreadful during the previous 10 Januaries. The stock has been positive just twice, and on average, has shed 3.8% during the month. That said, the
shares have been strong in general, up 31% year-to-date at $117.91 -- and not far from the two-year high of $119 they touched last week.
From a contrarian perspective, if CVX repeats history, potential losses could mount. The reason: Optimism is extremely high among the brokerage crowd. Over two-thirds of analysts rate the oil stock a "buy" or better, with not a single "sell" opinion to be found -- leaving Chevron Corporation vulnerable to downgrades.
Exxon Mobil Corporation (NYSE:XOM)
XOM's performance has been similar to its sector peer. In the last 10 years, the shares have been down in January 80% of the time, and sport a typical one-month loss of 2.2% That said, the stock has been on fire since bottoming at $71.55 in January, last seen at $90.30.
Options traders could be disappointed if XOM again struggles in January. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open twice as many calls as puts. Exxon Mobil Corporation's resultant call/put volume ratio of 1.88 ranks in the bullishly skewed 95th annual percentile.
The Coca-Cola Co (NYSE:KO)
KO has been positive in January even less often than the two aforementioned Dow stocks -- up just once in the past decade. On average, shares of the beverage king have slid 3.1% during the month. That's not exactly promising for a stock that's just one of three blue chips in negative year-to-date territory, off 3.7% at $41.39.
Fortunately, expectations are already pretty deflated on KO. For example, 10 of 13 analysts rate the stock a "hold" or worse. Then again, there's always room for short selling. Less than 1% of The Coca-Cola Co's float is dedicated to these bearish bets, so another rough start to a year could provoke short sellers to pile on.
Visa Inc (NYSE:V)
Finally, V has been negative in seven of the past eight years since going public, when looking specifically at January. The average one-month loss has been 2.4%. Speaking more broadly, the credit card stock has been less than impressive in 2016, gaining only 1% at $78.30 -- well below the return for the broader market.
Given this technical underperformance, Visa Inc is vulnerable to downgrades. Specifically, 20 of 24 analysts rate the stock a "buy" or better, compared to four "holds" and not a single "sell." Not to mention, options traders are extremely optimistic, with V's 50-day ISE/CBOE/PHLX call/put volume ratio of 2.74 registering at an annual peak.
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