Despite the recent turbulence in the markets, this year has been mostly positive for investors. Nevertheless, the Dow Jones Industrial Average has only managed to increase by 2.4% year-to-date (YTD) — trailing behind the Nasdaq Composite with an almost 7% YTD gain and the S&P 500 with an almost 8% rise.
Within the Dow Jones index, there are numerous top-tier companies. Nevertheless, several stocks in the Dow have experienced declines this year, with some major players such as Apple (NASDAQ: AAPL), Nike (NYSE: NKE), and UnitedHealth (NYSE: UNH) being close to their 52-week lows by almost 6%. Below are the reasons why these three dividend-paying stocks are experiencing declines, as well as why they could present excellent investment opportunities right now.
Image source: Getty Images.
Transition from industry leader to underperformer within the sector
Apple’s presence on this list is quite surprising. The company represents more than 7% of the Nasdaq Composite. Despite the drag created by Apple on the index, the Nasdaq Composite reached a new high on March 21 and has maintained a significant gain for the year. Historically, investors have been accustomed to Apple leading the market rather than trailing behind.
When we examine Apple’s performance against the technology sector, the underperformance becomes even more pronounced. Apple accounts for 19.2% of the Technology Select Sector SPDR Fund, an ETF that tracks the technology sector. However, Apple’s stock has remained relatively flat over the past year, while the sector has surged by more than 35%.
^IXT Chart
If Apple were solely part of a general sell-off in the Nasdaq and tech sector, it would be more understandable. However, when a dominant player moves contrary to its industry peers, it often signals that investors have specific concerns about the company.
For Apple, these concerns are largely valid. The company is experiencing a slowdown in growth, particularly in its second most critical market, China. Apple’s failure to monetize artificial intelligence (AI) and innovate consistently puts it at a disadvantage compared to tech giants like Microsoft and Nvidia, which are capitalizing on AI for sustained long-term growth.
The narrative continues
Apple seems to be out of sync with the current trends, which explains why investors are choosing to sell. To exacerbate matters, the Department of Justice has filed an antitrust lawsuit against Apple for its market practices related to smartphones.
The positive aspect here is that Apple only represents a small portion, 26.1…
..
