This Year's Biggest Winners Were 2022's Biggest Losers

Market leadership has changed with the change to 2023. Most of last year's most beaten-up stocks have recovered strongly this year, while 2022's biggest winners have shed value thus far in 2023. There are, however, a few names that stand out as a break from the norm.

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So far in 2023, Enphase Energy (ENPH) has been ranked among the worst-performing stocks in the S&P 500 SPX -1.38% with a decline of about 20%. In 2022, the price of the stock rose 45%, but the trend has now reversed. There has been a 15% decline in Northrop Grumman stock (NOC) this year following a 43% gain last year. As of the beginning of July, APA ( APA ) shares have fallen 12% year to date after soaring 77% in 2022.

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Meanwhile, energy, consumer staples, defense, and healthcare companies are among this year's biggest laggards despite big gains in 2022. By 2023, investors' preferences will shift towards more growth-oriented and riskier stocks, as a result of mean reversion.

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As well, many of 2022's worst performers are trouncing the market so far in 2023. Stocks in Tesla TSLA -5.69%, which lost 65% of their value in 2022, are up nearly 70% in 2019. The following companies lost at least 50% in 2022 and are already up by more than 50% in 2023: Align Technology (ALGN), Warner Bros. Discovery (WBD), Catalent (CTLT), Nvidia NVDA -3.35% (NVDA), and Carnival (CLL).

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These idiosyncratic stocks, however, could be worth a deeper look if they haven't followed the pattern.

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Despite losing more than 10% of its value in 2022, Pfizer PFE -0.85% (PFE) has lost 14% so far this year. It is due to concerns about the fading demand for its blockbuster Covid-19 vaccine and treatment. According toTrade Algo, Pfizer stock is a contrarian investment opportunity.

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Spice maker McCormick (MKC) lost nearly 13% in 2022 as high costs forced it to cut guidance. Stocks have fallen 10% year to date in 2023, continuing the decline that began in 2022. Campbell Soup (CPB) and General Mills (GIS) are similarly down 10% in 2023, but their stocks increased by 28% and 35% last year. A turnaround in 2023 might be possible for the spice and condiment maker. 

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Colgate-Palmolive (CL) and Procter & Gamble PG -1.31% (PG) are also consumer staples firms that lost value in 2022. The same is true for CVS Health (CVS).

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This year, Lumen Technologies (LUMN), which traded at levels not seen since the late 1980s, has lost another 25% to trade at levels not seen since 2022, a 56% decline in price. Over the past few months, the telecommunications company has eliminated its dividend and issued lackluster guidance. Investors remain skeptical despite a new CEO's efforts to turn the company around. 

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BAXTER International (BAX) has also had a challenging year, losing 40% in 2022. With shares down 22% in 2023, the medical products maker is off to an inauspicious start. “As management steps back, regroups, examines the portfolio, and manages debt, 2023 represents a transition year,” wrote Citi analyst Joanne Wuensch last week. “The first step to restoring the stock's value is to acknowledge its weaknesses, set reasonable guidance and finally execute."

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Stocks that outperformed the S&P 500 in 2022's down market have kept up their winning ways so far in 2023. These include Steel Dynamics (STLD) and Nucor (NUE). Steel Dynamics' stock jumped 60% last year and has risen 27% so far this year, while Nucor's stock has risen 27% so far this year. 

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Since China's reopening has boosted expectations of demand, stock prices have followed steel prices. However, both stocks are trading at their highest valuation multiples in years as a result of the rally.

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United Rentals (URI) rose 7% last year and is up 31% so far this year. New machinery supply has been tight due to component shortages and labor issues at equipment manufacturers such as Caterpillar (CAT) and Deere (DE). Future demand forecasts have also been lifted by infrastructure investment legislation.

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W.W. Grainger (GWW), Las Vegas Sands (LVS), Everest Re (RE), Omnicom Group (OMC), and Paccar (PCAR) have also maintained their 2022 rallies this year.