Americans love cheap things but hate cheap stocks
The S&P 500 Value Index is on its longest streak of consecutive declines on record.
In a market dominated by increased attention paid to the shiny, hyper-speculative stocks and assets producing eye-popping gains in a short time, there’s little appetite for bargain hunting. Even in a stock market that screens as very expensive by some oft-used metrics.
The S&P 500 Value Index has fallen in every trading day so far this month, an 11-session streak that’s its longest run in the red on record. While the benchmark US stock index is treading water in December, value stocks have given back 4.5%.
Six stocks in the iShares S&P 500 Value ETF, an ETF which tracks the S&P 500 Value Index, are down more than 15% over this stretch:
Steel Dynamics and Nucor: faced with steel prices lingering near multiyear lows and a soft outlook for demand in the year ahead.
UnitedHealth, Cigna, CVS: feeling pressure following a bipartisan push among US lawmakers that would force healthcare companies to sell off their pharmacy units in an attempt to help control costs, which has seemingly been backed by President-elect Donald Trump.
Texas Pacific Land: buy the rumor, sell the news? Once up 230% this year, the stock has been an absolute dog, peaking a couple days before it was added to the S&P 500. The firm’s main business is leasing land to oil drillers, but has looked to diversify its client base in buzzier areas like bitcoin miners and data centers. It’s curious why this is in a value ETF to begin with, with a forward price-to-earnings ratio north of 45 (versus 22.5 for the S&P 500).
The S&P 500 Value Index tracks constituents in the benchmark US stock gauge that screen as inexpensive based on how their book value (assets less liabilities), earnings, and sales compare to their price. SPDR S&P 500 Value ETF and Vanguard S&P 500 Value ETF are other tracking funds for the index.
There are still some gems amidst the wreckage, though: Teradyne, Walgreens Boots Alliance, Boeing, Warner Bros. Discovery, Micron, and Estée Lauder have all delivered a double-digit return so far this month despite being tarred with the “value” brush.
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