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Alberto Abaterusso
Alberto Abaterusso
Articles (2087) 

2 Underperforming Holdings to Reduce

They have fallen behind in recent years compared to the US market

February 14, 2020 | About:

Shareholders of National Beverage Corp (NASDAQ:FIZZ) and Diamond Offshore Drilling Inc (DO) have several reasons to consider reducing their holdings in these underperforming stocks.

First of all, these companies have underperformed the U.S. market in recent years. While the S&P 500, a benchmark for U.S.-listed stocks, was up 23% in the past year 45.7% in the past three years through Feb. 13, these two stocks have tumbled.

Second, they do not pay dividends and do not have any immediate plans to pay dividends in the future.

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

National Beverage

Shares of National Beverage have fallen 42% in the past year and 25% in the past three years through Feb. 13. The Fort Lauderdale, Florida-based producer and seller of waters, juices, energy drinks and carbonated soft drinks in North America has underperformed the S&P 500 by 65% and 70.7%, respectively.

The company stopped paying dividends about a year ago. The last dividend payment was made on Jan. 29, 2019.

Wall Street sell-side analysts issued a moderate sell recommendation rating for this stock and established an average target price of $44 per share.

According to the Peter Lynch chart, the stock is also not cheap. Its share price closed at $43.37 for a market capitalization of $2 billion on Thursday.

The 14-day relative strength index of 39 suggests the stock is not far from oversold levels.

Diamond Offshore

Shares of Diamond Offshore Drilling have fallen by 61% in the past year and 78.3% in the past three years through Feb. 13, underperforming the S&P 500 Index by 83.6% and 124%, respectively.

The Houston, Texas-based provider of contract drilling services to oil and gas operators worldwide paid the last quarterly cash dividend of 12.5 cents per common share on Dec. 1, 2015.

Wall Street sell-side analysts issued a moderate sell recommendation rating for shares of Diamond Offshore Drilling with an average price target of $4.52 per unit.

Shares of Diamond Offshore Drilling closed at $3.80 on Thursday for a market capitalization of $528.78 million. According to the Peter Lynch chart, this stock is overvalued by the market.

The 14-day relative strength index of 24 suggests the stock is oversold.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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