There's nothing like a bear market to remind S&P 500 investors how low stocks can go. And it's a surprisingly low number per share in some cases.
Seven stocks in the broad S&P 1500 index, which includes small and mid-size companies in addition to the S&P 500, now have plunged below 3 a share each as the market drops into a bear market, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. Some of the hardest stocks hit include real estate company Diversified Healthcare Trust, cash dispenser maker Diebold Nixdorf and office logistics company Pitney Bowes.
Such massive drops in stock value to such low levels indicates the kind of duress some poorly positioned companies are in now that the Fed and economy are turning more hostile.
"We are now in another downswing in the ongoing bear market," said Brad McMillan, chief investment officer for Commonwealth Financial Network. But that masks much of this market's worst pain.
S&P 500: Sinking Share Prices
If you're wondering just how much duress the S&P 500 is in, consider the size of the drops through this month. The average S&P 500 stock is now down 19% this year.
Due to the fact the S&P 500 overweights larger companies that've dropped most on the way down, the S&P 500 itself is down more than 22% this year. That puts the market into bear territory. And you're starting to see some big-cap S&P 500 companies' per-share prices get uncomfortably low, too. Communications gear maker Lumen Technologies is now the lowest price stock in the S&P 500, trading for 8.09 a share. That's down nearly 36% this year.
But you're seeing much more dramatic implosions within the S&P 1500.
Close To Penny Stocks Now
Selling is happening so swiftly in the markets, some formerly major companies are close to being penny stocks.
Take Diversified Healthcare Trust as an example. The real estate company that owns properties for senior living is now trading for just 1.14 a share. That's down a crushing 63% this year. Why are investors selling off this stock so viciously? It's all about fundamentals. This year, adjusted profit is seen plunging nearly 90%. But it gets worse. The company is expected to lose 75 cents a share in 2023. And investors have little patience for losses in this market.
And in a twist of irony, a company that makes machines that dispense dollar bills is now trading for just a few bucks. Diebold Nixdorf's shares are off more than 70% this year to 2.68 a share. The company's business is getting hurt by the rise in digital, noncash payments. And it, too, is seen swinging to a loss of 32 cents a share this year.
Don't forget Pitney Bowes, once a formidable player in the shipping and office supplies industry. Shares are down more than 60% this year. That knocks its per-share value to just 2.46. The company is seeing a steady decline. Adjusted profit per share is projected to fall nearly 38% this year.
More Sub-$3 S&P 500 Companies To Come?
If the S&P 500 continues to fall apart, it's only a matter of time before you see more low-priced stocks in the index. And the ones you see in the S&P 500 are just the beginning.
"Unsettling market volatility is going to be here for a while as Wall Street broadly downgrades their end-of-year S&P 500 targets," said Edward Moya of Oanda. "A hard landing is becoming the base case scenario for many and that means more economic pain along with a much weaker stock market is coming."
S&P 1500 Stocks Trading For Less Than $3 A Share
| Company | Symbol | Index | Closing price Sept. 23 | Stock YTD % ch. | Sector |
|---|---|---|---|---|---|
| Diversified Healthcare | S&P 600 | 1.15 | -63.1% | Real Estate | |
| Gannett | S&P 600 | 1.99 | -62.7 | Communication Services | |
| New York Mortgage Trust | S&P 600 | 2.37 | -34.7 | Financials | |
| Community Health Systems | S&P 600 | 2.38 | -81.6 | Health Care | |
| Pitney Bowes | S&P 600 | 2.65 | -62.9 | Industrials | |
| Diebold Nixdorf | S&P 600 | 2.75 | -70.4 | Information Technology | |
| Franklin Street Properties | S&P 600 | 2.84 | -52.4 | Real Estate |
