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Is It Time to Buy the Dow Jones' 3 Worst-Performing April Stocks?

Motley Fool - Fri Apr 29, 9:24AM CDT

April has been a rough month for stocks. A combination of disappointing earnings results, ongoing pressures from Russia's invasion of Ukraine, and a slew of macroeconomic concerns have prompted investors to become even more risk-averse. Even the typically sturdy Dow Jones Industrial Average index has seen its level pushed down roughly 2.8% in the month's trading.

With bearish momentum gripping the market, some big names have seen their stock prices slashed. Read on for a countdown of the Dow Jones' three worst-performing stocks in April and a look into whether or not these companies are worth investing in right now.

A dollar bill and a red line going down a chart.

Image source: Getty Images.

3. Walt Disney

In addition to the geopolitical and macroeconomic pressures that are roiling the rest of the market, WaltDisney(NYSE: DIS) shareholders have received some bad news early in the current earnings season. This time it wasn't anything in the company's own quarterly report (the media giant won't release Q1 results until May 11); it was shocking results from one of its biggest competitors.

Netflix published Q1 earnings on April 19, and the streaming-video leader revealed it had actually lost 200,000 net subscribers in the period. Netflix had previously guided for net subscriber additions of roughly 2.5 million in the period, so the big miss was shocking enough to have ripple effects across the stock market. Even worse, the company expects to lose an additional 2 million subscribers in the current quarter.

DIS Chart

DIS data by YCharts.

While a competitor's stumbling can sometimes be a good thing, Netflix's worrying subscriber losses likely suggest some weakness and saturation in the overall subscription-streaming market. The House of Mouse has positioned its Disney+ service as one of its most important growth drivers, and the unit's results have been great thus far, but the overall industry backdrop now looks less favorable. While there's a good chance Disney will see subscriber growth for its streaming service slow significantly, the company still looks to be in good shape overall.

The other big catalyst for the stock's April sell-off was new legislation passed in Florida that dissolved the special district status for the company's Disney World park and will likely result in the business facing a higher tax bill going forward. The development isn't a favorable one, but the parks-and-resorts segment is still putting up strong performance amid easing pandemic conditions and seems to be in a good position for the long term.

Disney is still a clear leader in the media and entertainment industry, and the stock looks like a smart buy for long-term investors after recent sell-offs.

2. Boeing

Like other stocks, Boeing(NYSE: BA) saw a big pullback in April's trading on fears that a recession is looming. In addition to the concerning macroeconomic backdrop, the company also published first-quarter results and issued guidance that gave investors cause for concern. The aviation giant published its Q1 earnings on April 27, and its performance came in significantly worse than the market had expected.

BA Chart

BA data by YCharts.

The company posted a non-GAAP (adjusted) loss per share of $2.75 on revenue of $13.99 billion. Meanwhile, the average analyst estimate had called for an adjusted loss of $0.25 on revenue of $15.9 billion. The much wider-than-expected loss occurred because of charges totaling $660 million stemming from product delays and costs associated with a project it took on for its Air Force One program.

Boeing also announced that delivery of its new 777X jets would now take place in 2025, a delay from the certification target of late 2023 that it issued last year. The company had originally issued a target launch of 2020 for the new 777X series. While Boeing remains a titan of its industry, it's probably a good idea to wait for signs that the company is making progress in improving its engineering initiatives before buying the stock.

1. Salesforce.com

With a 20.2% slide, Salesforece.com(NYSE: CRM) currently stands as the Dow's biggest loser in April.

CRM Chart

CRM data by YCharts.

Despite its leading position in the customer-relationship-management (CRM) software space, Salesforce.com remains a growth-dependent tech stock. Companies in the category have generally seen precipitous valuation declines in conjunction with indications that more big interest rate hikes are coming this year in order to combat inflation.

Even after the big pullback, Salesforce has a market capitalization of roughly $173 billion and is valued at approximately 37.5 times this year's expected sales. That valuation could set the stage for more volatility in the near term if the market continues to become increasingly risk-averse.

When economic conditions are tough and outlooks are uncertain, investors generally prefer to move out of companies with growth-oriented valuations in favor of those that are posting bigger profits. On the other hand, the long-term growth outlook for Salesforce remains quite appealing.

The digital-transformation trend is still in the early stages of reshaping the business world, and Salesforce's CRM software is helping its clients grow sales by allowing them to remain in touch with customer needs and trends. With shares down roughly 44% from the peak they hit last November, the stock looks like a worthwhile buy at current prices.

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Keith Noonan has positions in Walt Disney. The Motley Fool has positions in and recommends Netflix, Salesforce.com, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.