We recently compiled a list of the 10 Worst Performing Blue Chip Stocks in 2024. In this article, we are going to take a look at where Charter Communications Inc. (NASDAQ:CHTR) stands against the other worst performing blue chip stocks in 2024.
Strong Market Performance Amid Uncertainty
The third quarter ended with a bang, with all the major indices near record highs as investors shunned macroeconomic instability, soaring geopolitical tensions and U.S. election uncertainty. Strong gains in the quarter were fuelled by expectations of lower interest rates heading into year-end and growing expectations of a soft landing of the U.S. economy.
Artificial intelligence has been a big success story that has helped push the equity markets to record highs. Against the overall trend, the current bull market had a better second year, up 33% compared to the historical average of 13%, and a better first year, up 22% compared to the historical average of 44%, according to BofA. It’s also important to remember that even bull markets’ third years of growth can be rocky.
READ ALSO: 10 Most Promising Future Stocks According to Analysts and 10 Most Promising Growth Stocks According to Hedge Funds.
While the S&P 500 has gained over 60% since the 2022 lows, researchers at BofA note that there could be a significant pullback in the near future.
“Historical studies suggest that the third year of a typical bull market tends to be unremarkable as a mild bout of de-rating overshadows humdrum earnings growth,” BofA equity strategist Ritesh Samadhiya said in a note to clients.
Economic Concerns and Investment Opportunities
While voicing concern that the economy is running at a hotter-than-desired pace, Federal Reserve Governor Christopher Waller hinted that future interest rate cuts would be less drastic than the significant move in September. According to policymakers, recent employment, inflation, GDP, and income reports indicate that the economy might not slow down.
“While we do not want to overreact to this data or look through it, I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting,” Waller said in prepared remarks for a conference at Stanford University.
The sentiments come as investors remain cautious about the long-term outlook amid soaring geopolitical tensions and economic uncertainties. The growing uncertainties have been one of the catalysts behind some of the worst-performing blue chip stocks in 2024.
Nevertheless, some underperforming stocks may allow investors to purchase the long-term decline. However, many are just dealing with issues unique to their company, such as bloated balance sheets or broken business models.
It might be a while before the market bounces back. In the interim, investors should be aware of the market’s possible value stocks. Even if it is not popular or profitable in the short term, the long-term benefits of investing wisely and deviating from the crowd can be significant, according to the contrarian investing philosophy.
Investing during a market downturn may present chances for sizable returns in the long term. We examine the top 10 blue-chip losers to date and potential opportunities for investors to acquire them.
Our Methodology
To prepare this article, we began by listing all the holdings of the various blue chip ETFs like E.A. Bridgeway Blue Chip ETF, Vanguard Mega Cap ETF, and DOW 30. We then sourced the year-to-date share price returns for each company. Based on these returns, we ranked the companies in descending order.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Charter Communications Inc. (NASDAQ:CHTR)
Year to Date Return: -14.91%
Number of Hedge Fund Holders: 48
Charter Communications, Inc. (NASDAQ:CHTR) is a broadband connectivity and cable operator company that serves residential and commercial customers. It is one of the companies that has felt the full force of people cutting the cord in favour of streaming networks.
With people steadily canceling their cable service, Charter Communications has seen its core business come under immense pressure. In Q2, Charter Communications, Inc. (NASDAQ:CHTR)’s Spectrum lost 154,000 residential broadband users; 5,000 new business accounts were added to compensate for this decline. These subscriber declines in both situations build upon and quicken patterns that began to emerge in the middle of last year.
In the second quarter, Charter Communications, Inc. (NASDAQ:CHTR)’s residential and business internet users dropped from 149,000 to 30.4 million. Consequently, revenue only increased by 0.2% to $13.7 billion, which was more than the $13.6 billion forecast.
Profits per share improved from $8.05 to $8.49, helped by share buybacks, and adjusted earnings climbed 2.6% to $5.7 billion, exceeding estimates of $7.98. The company reduced the number of shares outstanding by about 1% during the quarter by repurchasing 1.5 million shares for $404 million.
Although a competitive broadband market is hindering growth in core subscribers, Charter Communications, Inc. (NASDAQ:CHTR) is experiencing some success in rural markets thanks to a government initiative to increase broadband access in these areas and its push into mobile. With a price-to-earnings ratio of 12, the stock is inexpensive enough to move higher with only slight profit gains, especially as the company continues its share buybacks.
Parnassus Value Equity Fund stated the following regarding Charter Communications, Inc. (NASDAQ:CHTR) in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer, NICE and Charter Communications, Inc. (NASDAQ:CHTR). NICE is a leading cloud contact center software company. Charter’s stock had fallen due to near-term concerns, which we believe will not have a major impact on the long-term value of the business. Charter Communications has had several issues that created short-term uncertainty. We assessed that these issues have limited impacts on the long-term value of the business and initiated a position to take advantage of the stock’s historically low valuation.”
Overall CHTR ranks 4th on our list of the worst performing blue chip stocks in 2024. While we acknowledge the potential of CHTR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CHTR, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
