Outside of energy, investors have found few safe-havens over the past 12 months. The Nasdaq is down over 30% in 2022 and mega caps like Amazon (AMZN) , Tesla (TSLA) and Alphabet (GOOGL) have all taken it in the shorts. Most of my portfolio consists of investments in small- and mid-cap equities -- also a hard place to be as the Russell 2000 is down better than 20% so far this year.
But I'm watching two major big-cap stocks that have tumbled hard and might be ready to roll again.
Let's start with Disney (DIS) , which has a massive presence in my home state of Florida. The stock is down nearly 45% for the year. Previous management made myriad mistakes that negatively impacted shareholder value. This included getting into the middle of a political fight -- of which I believe it had no business being in and then losing it badly.
The silver lining to that episode is it was part of the reason the company dumped its short-tenured CEO and brought back Bob Iger, who had previously successfully run the company for over a decade and a half. Mr. Iger has already started to mend the fences with the state of Florida. Things could be brighter in the coming year as Disney has three of the five most anticipated movies on the schedule for 2023. The stock also seems to be trying to put in a bottom near these levels.
The old and once again CEO certainly will have major challenges. Expenses need to come down and while its theme park business is currently strong, it would be vulnerable should the economy go into a recession in 2023. He also needs to stem the red ink coming out of the company's streaming business. However, he has a lot of levers he can pull such as re-empowering creative executives and potentially even spinning off ESPN as Wells Fargo recently has suggested. Overall, it seems a reasonable level to start to accumulate some shares of the Mouse House.
Next up is Wells Fargo (WFC) . It seems every few years, the company has to pay a substantial fine for bending the rules too far. This week the bank announced it had agreed to a $3.7 billion settlement with the Consumer Financial Protection Bureau to resolve long outstanding issues. This should go a long way to resolving the current asset cap on this financial institution.
In addition, the mortgage market is more than challenged and is likely to remain so throughout 2023. Wells Fargo is a major player in this market and has initiated significant layoffs in its mortgage operations to substantially bring down expenses. On the brighter side, the bank is benefiting greatly from a much-improved net interest margin thanks to the surge in interest rates in 2022.
WFC is another stock that appears to be trying to put in a bottom after pulling back nearly 20% over the past year. At just over eight-times trailing earnings and a near 3% yield, the equity seems to be in value territory.
