Five Among the S+P 500's Big Losers Worth a Second Look

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 |  Includes: BSX, DF, GCI, S, SVU
by: Whopper Investments
The following are the 20 worst performing S+P 500 stocks, along with their 5 year annualized returns and their current P/B (in order from “best” to worst performing).
Company/Ticker 5 Year P/B
Lennar Corp. LEN -20.18 1.46
Hartford Financial Services HIG -20.41 0.6
Zions Bancorp. ZION -20.69 0.92
Boston Scientific BSX -21.01 0.98
Huntington Bancshares HBAN -21.3 1.3
ProLogis PLD -21.66 0.93
Electronic Arts ERTS -22.11 1.99
Legg Mason LM -23.2 0.94
Dean Foods DF -23.34 1.16
SLM Corp. SLM -23.81 2.1
Key Corp. KEY -24.37 0.89
Gannett Co. GCI -25.32 1.71
SuperValu SVU -25.51 1.22
Advanced Micro Devices AMD -25.95 8.79
Marshall & Ilsley MI -26.14 0.57
Regions Financial RF -26.47 0.65
Pulte Homes PHM -26.84 1.38
Sprint Nextel S -27.33 0.82
Citigroup C -36.32 0.85
American International Group AIG -47.68 0.9
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The number of financial stocks on here is absolutely absurd. Looking deeper into the list, five names jump out as worth a deeper look.
Boston Scientific – BSX
Among the most disappointing names of not just the past five years but the past decade, BSX hasn’t been able to get anything right in the new millennium. It seems twice a year a value investor will come in, announce the company is undervalued and make an investment, and then quietly exit his investment at a loss in a year or two. However, Ray Elliot, the company’s CEO, has been on the job less than two years and made huge gains in his previous stint at Zimmer. The company could finally be on the verge of a turnaround. Shares seem reasonably priced, trading for under book value and 8.6x EV / EBITDA.
Dean Foods - DF
Dean has been crushed by sharp rises in food and fuel costs, as they have been unable to pass on rising costs to their retail customers. People are worried the company might be unable to repay / restructure their debt and need to firesale assets or raise equity. However, the company has several valuable assets and trades for a reasonable valuation at 7.35x EV / EBITDA.
Gannett – GCI
Gannett was hit by the double whammy of a drop in newspaper circulation caused by the internet + a drop in ad rates caused by the recession. The company, however, is starting to respond, cutting costs and closing unprofitable papers. They also have a growing online segment and investments in several interesting assets, including careerbuilder.com. Shares trade for an extremely cheap 4.61x EV / EBITDA, and several sources have noted the company could have interesting synergies / buyout potential for a major tech conglomerate like google.
Supervalue – SVU
I first mentioned SVU a few weeks ago, and shares received another interesting write up here. Shares have been crushed recently, as results have disappointed and investors question whether the company’s future in the face of competition from WMT and TGT’s new offering. However, the company continues to generate substantial amounts of cash, pay down loads of debt, and is the market leader in many of its markets. I’ve also seen analysis suggesting that the value of all of their real estate, net of debt and leases, is $9 per share, almost 25% above today’s price. Shares trade for an attractive 4.59x EV / EBITDA.
Sprint – S
Shares trade for under 5x Ev / EBITDA, astonishingly cheap considering the company’s growth and turn around prospects. The company would make a lot of sense for a strategic buyer (assuming they could get regulatory approval), and David Einhorn recently picked up shares, thinking their vast spectrum is incredibly valuable and could drive market share gains. It also fits in well with the growing smart phone theme.
To me, shares of SVU and S look especially attractive. Their core asset values are likely worth much more than the stocks currently price in, and if their management team can unlock that value (in SVU’s case) or stop destroying that value (in Sprint’s case), the stock prices could end up materially higher.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.