By Contributor John Dorfman
Bottles of The Kraft Heinz Co. ketchup in a supermarket in Lisbon, Portugal. Kraft Heinz is one of … More several stocks that fell in the second quarter, though the U.S. stock market was up. Photographer: Zed Jameson/Bloomberg
2025 Bloomberg Finance LP
Give me your battered, your cheap,
Your wounded stocks that crave a second chance,
The wretched refuse of the market鈥檚 heap.
They鈥檝e stumbled, yet they soon again may dance.
That little poem (with apologies to Emma Lazarus) sums up the idea behind my Casualty List. It鈥檚 a roster of stocks that have been banged up in the latest quarter, and that I think can recover and thrive.
There aren鈥檛 a lot of candidates for this, my 89th Casualty List, because the market was up 10% in the second quarter. Nonetheless, I see a few banged-up bargains out there.
Kraft Heinz
Take Kraft Heinz Co. (KHC), for instance. The maker of the ketchup you pour on your burgers was down 14% in the quarter. The company lowered its guidance, and had to recall some packaged turkey because of a listeria problem.
Worse, the stock shows no net gains over the past ten years. Analysts despise it, with only five 鈥渂uy鈥 ratings among the 24 Wall Street denizens who cover it.
As a contrarian, this gets me interested. The company鈥檚 well-known brands include Heinz, Kraft, Oscar Mayer, Philadelphia (cream cheese) and Velveeta. Income investors should like — maybe love — the stock鈥檚 6% dividend yield.
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Bluntly, there鈥檚 been no growth here. But the stock price has fallen to a point where I think it鈥檚 a buy. The shares sell for less than book value (corporate net worth per share).
Down almost 25% in the second quarter, Sylvamo Corp. (SLVM) of Memphis, Tennessee, is a paper manufacturer spun out from International Paper Co. (IP) in 2021.
The company鈥檚 sin? It missed sales and earnings estimates in the first half, by a fair margin. The stock, which hit $98 a few months ago, languishes today at about $53.
Since the paperless society haven鈥檛 arrived yet, and since Sylvamo predicts that its results will improve in the second half of this year, I think the stock鈥檚 big slide was an overreaction. The company remains highly profitable.
The stock sells for less than 10 times recent earnings.
Helmerich & Payne
Last July, a barrel of oil cost about $80. A year later, it鈥檚 about $66. So, energy stocks are out of favor.
You can do worse than be a contrarian in a cyclical world. I think now is a pretty good time to stock up on oil-and-gas stocks. One that was slammed in the second quarter is Helmerich & Payne Inc. (HP), down 41% as it lost some valuable business in Saudi Arabia.
Based in Tulsa, Oklahoma, the company is an oil-and-gas driller, operating in the U.S., Latin America, Australia and the Middle East. It鈥檚 a high-risk stock but a cheap one, selling for only 56% of book value. The normal ratio in the past ten years has been 130% of book.
President Trump鈥檚 鈥渂ig beautiful bill鈥 that just passed Congress cuts federal spending on Medicaid, the federal-and-state program to help poor and disabled people pay for health care. Centene Corp. (CNC) is a managed-care company based in Saint Louis, Missouri. About 60% of its members are in Medicaid.
No wonder, then, that Centene stock fell off a cliff. It鈥檚 down 45% this year, with an 11% loss in the second quarter and a lot more in July.
I think Centene has a good chance of weathering this storm. It has been profitable in 23 of the past 24 years. Its balance sheet, while not magnificent, seems pretty good to me.
Meanwhile, the stock is cheap, selling it less than five times recent earnings.
My Casualty List has held up pretty well over the years since it began in June 2000. The average one-year return on my selections has been 14.4%, beating the Standard & Poor鈥檚 500 Total Return Index at 11.5%.
Bear in mind that my column results are hypothetical and shouldn鈥檛 be confused with results I obtain for clients. Also, past performance doesn鈥檛 predict the future.
One-year returns can be measured for 85 lists, of which 53 have been profitable and 39 have beaten the index.
My list from a year ago was unsuccessful. I recommended five stocks, three of which fell. The biggest loser was Metallus Inc. (MTUS), down 26%. D.R. Horton Inc. (DHI) dropped 2% and Ball Corp. (BALL) 1%.
My only gainers were Walgreens Boots Alliance Inc. (WBA), which rose 12% on a buyout offer, and Valero Energy Corp. (VLO), up 1%. Meanwhile, the S&P 500 with dividends included rose 14%.
Disclosure: I own D.R. Horton for one client. I have no personal positions in the stocks discussed in today鈥檚 column.
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