5 Stocks That Got Run Over By The Trump Train
Zacks Investment Research | Dec 09, 2016 04:05AM ET
It seems the Trump rally is in no hurry to fade away. U.S. stocks enjoyed their best day since the election on Wednesday and gained on Thursday as investors continued to exit bonds and enter the equity markets. Speculation that the new administration would bring about tax cuts, introduce fiscal stimulus measures and deregulate key sectors continued to boost markets upward.
Financials led the charge yet again, with Goldman Sachs (NYSE:GS) leading the charge for the Dow with gains of 2.5%. Bank stocks continue to rise following expectations that the Dodd Frank Act will be repealed and the Federal Reserve will hike rates later this month.
However, it hasn’t been smooth sailing for all sectors since Trump registered his surprise victory. Some of them have fallen out of favor as investors rotate into cyclical stocks. Ohers are expected to feel the downside of the new administration’s policies.
Utilities, Consumer Staples Out of Favor
Though utilities and consumer staples remain in the green year-to-date they have fallen out of favor with investors. Some analysts and market watchers had gone as far as to upgrade this category right after the election. However, the Consumer Staples Select Sector SPDR XLU has declined 3.5% over the same period.
One factor working against these categories is an imminent Fed rate hike later this month. Additionally, Trump has promised to introduce strong fiscal stimulus measures which will in turn lead to higher interest rates. This is why the future doesn’t look any rosier for this category even as the allure of cyclicals increases.
Healthcare Dragged Lower by Uncertainty
Trump’s election had allayed fears among investors in healthcare since Hillary Clinton had promised to introduce price controls on the pharma sector. However, Trump’s criticism of the Affordable Care Act had led to a completely different set of concerns. Any changes to this landmark law would lead to major disruption for the entire sector.
Meanwhile, Trump has also raised concerns about exorbitant drug prices. Healthcare stocks took a major hit on Wednesday after the Time’s cover story “Person of the Year” highlighted that U.S. President-elect Trump had declared strong intentions to reduce drug prices. This led the iShares Nasdaq Biotechnology ETF IBB to plunge 2.9%, which in turn had a negative impact on the Nasdaq.
Investors Rotate Out of Gold
Metal and mining stocks had moved higher immediately after Donald Trump’s election. At that point, investors had chosen to focus on his promises to resuscitate the country’s manufacturing sector and boost infrastructure spending.
Since then gold prices have moved lower with the SPDR Gold Trust (V:GLD) losing in excess of 8%. The yellow metal continues to move lower on speculation that Trump’s proposed fiscal stimulus measures will boost growth, leading to higher interest rates and a stronger dollar. An increase in rates will rob gold of its sheen since it is not a yield generating investment.
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5 Major Losers
As markets continue to move upward on hopes that Trump’s policies will lead to gains for cyclical stocks, defensive sectors are losing their allure. Meanwhile, healthcare’s outlook seems uncertain as investors remain concerned about the nature of the administration’s policies. Below we examine five of the major losers during this period which have also been impacted by sector specific factors.
5 Key Losers Over Last 30 Days
ConAgra Foods, Inc. (NYSE:CAG) is one of the leading branded food companies of North America
ConAgra has a Zacks Rank #5 (Strong Sell). Its earnings estimate for the current year has declined by 31.6% over the last 30 days. The stock has lost 21% over the last 30 days, underperforming the Zacks Food Miscellaneous/Diversified sector, which has declined 2.7% over the same period.
Agnico Eagle Mines Ltd. (NYSE:AEM) is a gold producer with mining operations in Canada, Mexico and Finland, and exploration activities in Canada, Europe, Latin America and the U.S.
Agnico Eagle Mines’ earnings estimate for the current year has declined by 5.8% over the last 60 days. The stock has lost 20.2% over the last 30 days, underperforming the Zacks Mining Gold sector, which has declined 12.8% over the same period. The stock has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AngloGold Ashanti Ltd. (NYSE:AU) is involved in the exploration and mining of gold.
AngloGold Ashanti has a Zacks Rank #5. Its earnings estimate for the current year has declined by 22.2% over the last 30 days. The stock has lost 17.5% over the last 30 days, underperforming the Zacks Mining Gold sector, which has declined 12.8% over the same period.
Mylan N.V. (NASDAQ:MYL) is a global pharmaceutical company with a well-established generics business as well as a presence in specialty pharmaceuticals.
Mylan has a Zacks Rank #5. Its earnings estimate for the current year has declined by 1.1% over the last 30 days. The stock has lost 11.4% over the last 30 days, underperforming the Zacks Medical Generic Drugs sector, which has declined 10.8% over the same period.
Calpine Corp. (NYSE:CPN) is an owner and operator of natural gas fired and geothermal power plants across North America.
Calpine has a Zacks Rank #4. The stock has lost 5.8% over the last 30 days, underperforming the Zacks Utility Electric Power sector, which has declined 10.8% over the same period.
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