Shareholders of Waters Corporation (WAT, Financial) and Banc of California, Inc. (BANC, Financial) have several reasons to consider easing their holdings in these underperforming stocks.
First of all, these companies have significantly underperformed the S&P 500 so far this year, and over the past year and two years. The benchmark for the U.S. market has gained about 1% year-to-date, 18.5% over the past year and 23.2% over the past two years.
Additionally, these stocks have low or nonexistent dividends.
Lastly, Wall Street sell-side analysts recommend to decrease holdings in these two stocks.
Waters Corporation
Shares of the Milford, Massachusetts-based provider of analytical workflow solutions to businesses have underperformed the S&P 500 by 5.6% so far this year, 23.3% in the past year and 41% in the past two years through Jan. 31.
The stock paid a small annual dividend of 1 cent per common share only once in 1996, and since then it has not distributed dividends.
Wall Street sell-side analysts issued a moderate sell recommendation rating for this stock and established an average target price of $207.75, which reflects a 7.2% downside from the share price of $223.79 at close on Friday.
The stock has a market capitalization of $14.42 billion, a price-book ratio of 126.15 compared to the industry median of 4.45 and a price-sales ratio of 6.61 versus the industry median of 3.63.
Despite poor share price performance, the stock still looks overvalued according to the Peter Lynch chart.
The 14-day relative strength index of 38 suggests that the stock is not far from oversold levels.
Banc of California
Shares of the Santa Ana, California-regional bank underperformed the S&P 500 by 7.3% year-to-date, 13.3% in the past year and 42% in the past two years through Jan. 31.
Banc of California paid a quarterly cash dividend of 6 cents per common share on Jan. 2, 2020. The dividend has decreased by 14.2% over the past three years.
Wall Street sell-side analysts issued a moderate sell recommendation rating for this stock and established an average target price of $15 per share, which represents a 6% decline from the share price of $15.96 at close on Friday.
The stock has a market capitalization of $812.11 million, a price-sales ratio of $2.99 versus the industry median of 2.88 and a price-book ratio of 1.13 compared to the industry median of 1.04.
The share price still seems overvalued according to the Peter Lynch chart.
The 14-day relative strength index of 36 suggests that the stock is approaching oversold levels.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- A Trio of High-Yield Stocks for the Dividend Investor
- 3 Low Price-Book Stocks on Investors' Radars
- These Stocks Are Growing Sales Fast
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