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Alberto Abaterusso
Alberto Abaterusso
Articles (2203) 

2 Underperforming Holdings to Consider Reducing

They disappoint from several standpoints

January 06, 2020 | About:

Shareholders of Hiscox Ltd (HCXLF) and OZ Minerals Limited (OZMLF) have several reasons to consider reducing their holdings in these underperforming stocks.

First of all, these companies have underperformed the S&P 500 index in recent years. While the S&P 500 was up 27% in the past year, 16% in the past two years and 42% in the past three years through Jan. 3, these two stocks delivered significantly worse returns.

They also both have low dividend yields with no plans to increase them any time soon.

Lastly, Wall Street sell-side analysts recommend easing any holdings in these stocks.

Hiscox Ltd

Shares of Hiscox Ltd have fallen 4% in the past year and 1.3% over the past two years through Jan. 3. The Hamilton, Bermuda-based provider of insurance and reinsurance services has underperformed the S&P 500 by 31% and 17.3%, respectively.

The stock currently pays a semi-annual cash dividend of 13.8 cents per common share. The last dividend payment was made on Sept. 11, 2019. The dividend has not grown for the past 10 years.

Wall Street sell-side analysts issued a moderate sell recommendation rating for this stock and established an average target price of $16.31, which reflects a 13% downside from Fridays closing share price of $18.75.

According to the Peter Lynch chart, the stock is overvalued.

The 14-day relative strength index of 49 suggests the stock is neither overbought nor oversold.

GuruFocus assigned a moderate rating of 4 out of 10 for the companys financial strength and a positive rating of 7 out of 10 for its profitability.

OZ Minerals Limited

Shares of OZ Minerals Limited have risen by 11.4% in the past year, 2.55% in the past two years and 9.9% in the past three years, underperforming the S&P 500 Index by 15.6%, 13.45% and 32.1%, respectively.

The Australian metals exploration and mining company paid a small semi-annual cash dividend of 15 Australian cents (10 cents in USD) per common share on March 26, 2019. The dividend grew 9.3% over the last 12 months of trading but declined 10.34% over the past three years and 10.25% over the past five years.

Wall Street sell-side analysts issued a strong sell recommendation rating for OZ Minerals.

Shares of OZ Minerals closed at $7.25 on Friday for a market capitalization of $2.41 billion. According to the Peter Lynch chart, this stock seems to be overvalued by the market.

The 14-day relative strength index of 48 suggests the stock is neither overbought nor oversold.

GuruFocus assigned positive ratings of 8 out of 10 for the company's financial strength and 7 out of 10 for its profitability.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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