3 Disappointing Blue Chip Stocks That Have Crashed as Much as 87% in 10 Years

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4 days ago

These stocks have all fallen between 19% and 87% over the past decade.
Changing market conditions and consumer tastes and preferences have weighed on these businesses.
Investors can learn a lot from their downfalls.
10 stocks we like better than Pfizer ›
Normally, a buy-and-hold strategy pays off, and investors expect to see strong gains from their investments. The S&P 500 (SNPINDEX: ^GSPC) has risen by 200% over the past decade, and mirroring the index would have enabled you to triple your money.
The temptation to pick individual stocks, however, can be too alluring to pass up. But going with individual stocks can add more risk for your portfolio. Three stocks nowhere near the S&P 500's gains over the past 10 years and down well into negative territory are Pfizer (NYSE: PFE), Kraft Heinz (NASDAQ: KHC), and Walgreens Boots Alliance (NASDAQ: WBA).
Here's why these stocks have struggled so badly, what investors can learn from their declines, and if any one of them might be worth investing in today. (The returns listed are as of July 7.)
Pfizer has been a big name in healthcare for decades, but it has been a largely underwhelming investment over the past 10 years, falling by more than 19% during that time frame. The company has been dealing with patent expirations and needing to innovate to continue growing.
Things were looking good a few years ago when its COVID vaccine and pill resulted in its business achieving record numbers, with sales topping more than $101 billion in 2022. But with that no longer being a key growth catalyst for the business anymore and Pfizer now also worrying about government cutbacks on healthcare spending, investors haven't been eager to buy the stock, even despite its modest 18 times earnings multiple or its high yield of more than 7%.
There is, however, still hope for Pfizer to turn things around, as the healthcare company has been cutting costs, and it's in the early innings of many acquisitions, including oncology company Seagen, which it acquired in 2023.
What investors can learn from Pfizer's uninspiring performance over the past decade is to not get too caught up in market conditions that may only be temporary -- such as a pandemic. Buying at the time when Pfizer's valuation was rising due to strong COVID-related sales would have resulted in deeper stock losses today.
I think Pfizer can still make for an underrated buy, especially given its low price tag, as investors may be overly punitive on the business for factors out of its control -- uncertainty around healthcare spending, a declining COVID market, etc. But buying the stock will definitely require patience, as a rally may not be coming soon.
Food and beverage company Kraft has performed even worse than Pfizer over the past decade, losing more than 60% of its value. It has been just over 10 years since Kraft and Heinz merged, and it simply hasn't led to great results. In each of the past four years, Kraft's sales have been stagnant at around $26 billion.
The company is struggling to find ways to grow, and it hasn't done a good job of pivoting toward healthier options. While many of its brands are iconic and well known, they're also known for being fairly unhealthy -- including Mac & Cheese. And as consumers focus more on eating better, Kraft's brands simply aren't as popular as they have been in the past.
Investors should take Kraft's struggles in recent years as a reminder that when a business is falling behind market trends and consumer preferences, it may be a sign that its products may not be as relevant and successful in the future. And that's why I wouldn't buy the stock today, even though it's down so much; there could be much more adversity ahead for Kraft.
Undoubtedly, one of the biggest disappointments for investors over the past decade has been Walgreens. While its trusted neighborhood pharmacy business may have put it in a great position to offer value and win over local consumers in the past, it has also failed to keep up with changing market conditions.
The company operates on low profit margins, which can make it difficult for the business to stay out of the red and also pay a dividend, which Walgreens suspended earlier this year.
With consumers buying more goods online, there arguably isn't as much of a need to have a local Walgreens nearby, whether it's to purchase day-to-day goods or even pick up pharmaceutical items. This is another lesson for investors in the dangers of investing in a slow-moving business that is struggling to keep up with competition. If Walgreens focused more on online delivery and drastically reduced its store count to improve on its profit margins, the stock may have not been as horrible of a buy as it has been over the past decade.
Although Walgreens stock is up this year, that's because the company is going private, which has driven the stock up to around the purchase price ($11.45); Walgreens remains a risky business to invest in.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.
3 Disappointing Blue Chip Stocks That Have Crashed as Much as 87% in 10 Years was originally published by The Motley Fool