2017 was an epic year with 20%+ returns across most of the major averages. It was truly stunning. It felt like one of those years where you could toss darts and pick winners. Generally, this was true, but there where some obvious laggards.
Below are many of 2017’s laggards and a few stocks in each I’ll be watching:
Basic materials
Will consumers have more money in their pocket to spend on trips, travel, etc? Will a strengthening world economy demand more energy?
A lot of basic materials stocks finished the year well and some are reaching new highs. However, there are laggards. Most of the drilling companies were flat or down in 2017. RIG, ESV, NE, and NBR are all worth watching in ’18.
Some equipment companies should move if exploration increases, as well. WFT, MDR, SLB, and HAL are the leaders here.
The integrated O&Gs have done much better and many finished near their highs of the year (I’m currently in SU). We may see some new opportunities in this space, but it seems to make more sense to wait on some pullbacks.
Services
- Drugstores – watch WBA
- Autoparts – AZO had a nice back half of 2017, but still struggling to get above January ’17 highs. ORLY on watch here, too.
- Marketing Services
- Grocery Stores (mixed)
- Cable Television/Telecom (mixed)
- Department Stores (mixed – many finished year strong)
Others
- Retail REIT –
- Savings and Loans
- Healthcare Facilities REIT – HCN, OHI, SNH and the entire segment did absolutely nothing in 2017. Other than a strong dividend, there was really no reason to play in this place. I’ll be watching this in 2018 to see if they finally get out of their year-long consolidation.
- Long-term Healthcare Facilities – KND (pays dividend)
- Farm Products (mixed) – ADM
A few other 2017 laggards I have on watch
Z – A really bad 2017 with little interest from buyers. Will be watching for volume interest.
TDOC, SGRY, CYH – telemedicine needs to happen and maybe 2018 will bring back traders.
CMG – still sits on prime real estate and was hammered in 2017.
SBUX – higher employment, tax breaks, consumer confidence… all perfect for SBUX.
FIVE, DG, ROST, DLTR, TGT, WMT, BBY, W are my favorite retailers headed into 2018. Most of these are not laggards, but should benefit from the new tax plan and confident consumers. Along those lines, LOW and HD are beautiful and I can’t see what 2018 would do to hurt these.
Watch those bank stocks 😉
