Let the good times roll. The S&P 500 has soared nearly 21% in 2024, including a 2% gain in September. What’s especially noteworthy is that the bull market has broadened to include more than only high-flying tech stocks.
However, not all boats are being lifted by the rising tide. Three stocks were especially hit hard last month.
Dollar Tree
Shares of Dollar Tree (DLTR 0.17%) plunged 16.8% in September. The stock is down 50% so far in 2024.
Dollar Tree’s steep sell-off last month came after the discount retailer reported disappointing second-quarter results on Sept. 4. Net sales rose by only 0.7% year over year to $7.37 billion. Adjusted earnings per share (EPS) fell 26.4% to $0.67, well below the consensus Wall Street estimate of $1.04.
To add insult to injury, Dollar Tree cut its full-year 2024 guidance. The company now expects full-year net sales of between $30.6 billion and $30.9 billion compared to its previous outlook of net sales in the range of $31 billion to $32 billion. Dollar Tree projects adjusted EPS between $5.20 and $5.60 versus its earlier forecast of $6.50 to $7.00.
CEO Rick Dreiling said in the Q2 earnings press release that the company continues to face “immense pressures from a challenging macro environment.” However, he argued that the customer response to Dollar Tree’s expanded multi-price offering has been positive at the 1,600 stores where it has been implemented. The company has thousands of other stores remaining to convert to the multi-price format.
APA
Shares of APA (APA 4.91%) sank 14.2% last month. The performance added to the oil and gas exploration company’s ongoing misfortunes: Its stock has plummeted around 32% year to date.
APA’s biggest news in September was its announcement of an agreement to sell non-core assets in the Permian Basin to an undisclosed buyer for $950 million. However, most of the stock’s decline for the month came before this sale was announced.
So what caused the stock to sink last month? APA’s share price was dragged down by a broader malaise in the energy sector. Oil prices fell earlier in the month, weighing on many oil and gas stocks.
APA tends to be more volatile than many of its peers. Its beta coefficient is 3.24, much higher than the beta value of 0.68 for the Energy Select Sector SPDR Fund.
Moderna
Moderna (MRNA -4.34%) earns the dubious distinction as the third worst-performing stock in the S&P 500 last month. Shares of the messenger RNA (mRNA) pioneer fell 13.7%. The biotech stock is down 33% year to date.
The company’s research and development update on Sept. 12 served as the primary catalyst for the stock’s September decline. Moderna announced it was discontinuing five programs, notably including mRNA-1345, which targeted respiratory syncytial virus (RSV) in infants.
However, the news that distressed investors even more was Moderna’s lowering of its 2025 revenue guidance. The company now projects revenue next year of between $2.5 billion and $3 billion, down from its previous forecast of revenue between $3 billion and $3.5 billion.
Moderna also revealed that it expects to break even on an operating cash cost basis in 2028. It previously predicted it would reach break-even in 2026.
Buy on the dip?
Is it time to buy September’s worth-performing S&P 500 stocks? I think it depends on your investing style.
Value investors who like turnaround plays could be interested in Dollar Tree. Its shares trade at below 13 times forward earnings. The company’s plans to explore a sale or spin-off of Family Dollar could help Dollar Tree bounce back. However, I think most investors will be better off staying on the sidelines for now with this discount retailer.
Income investors who aren’t too risk-averse could like APA. The oil and gas company’s forward dividend yield hovers around 4.1%. My personal view, though, is that other energy stocks with higher yields and less volatility could be better picks than APA.
Aggressive growth investors could find Moderna appealing. The company expects to file for regulatory approvals for 10 products through 2027, including two by the end of this year. I suspect Moderna could be a solid winner in the second half of this decade.
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apa. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.
