Stocks that did not participate in 2023’s nearly 25% index return are the holdings to worry most about. Their performance may worsen as investors sell them for tax losses and do not look back.
Value investors who bought shares of Pfizer (PFE) when it fell to fresh 52-week lows lost money. PFE stock bottomed at $25.76 before snapping back at around $28. Trading volume, however, is drying up considerably. Consider avoiding PFE stock today. Similarly, Johnson & Johnson (JNJ) lost over 10% in 2023.
JNJ stock trades at a ~ 30 times price-to-earnings multiple. Avoid the stock due to its unfavorable valuations. Instead, look at Kenvue (KVUE), its successful consumer health spinoff. KVUE shares trade at a forward P/E in the teens.
In the energy sector, the Energy Select SPDR (XLE) is at the mercy of WTI crude prices. Its returns are nearly flat in 2023. Unless oil prices show sustained strength, be wary of risky energy firms like Antero Resources (AR) and Crescent Point Energy Trust (CPG).
Consider instead the bigger energy firms like Exxon Mobil (XOM) and Chevron (CVX). They invested in their infrastructure and are in a good position to grow profits as energy prices recover.
