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A Duo of Underperforming Stocks to Ease Up On

Shareholders of Waters Corporation (NYSE:WAT) and Banc of California, Inc. (NYSE:BANC) have several reasons to consider easing their holdings in these underperforming stocks.

First of all, these companies have significantly underperformed the S&P 500 so far this year, and over the past year and two years. The benchmark for the U.S. market has gained about 1% year-to-date, 18.5% over the past year and 23.2% over the past two years.


Additionally, these stocks have low or nonexistent dividends.

Lastly, Wall Street sell-side analysts recommend to decrease holdings in these two stocks.

Waters Corporation

Shares of the Milford, Massachusetts-based provider of analytical workflow solutions to businesses have underperformed the S&P 500 by 5.6% so far this year, 23.3% in the past year and 41% in the past two years through Jan. 31.

The stock paid a small annual dividend of 1 cent per common share only once in 1996, and since then it has not distributed dividends.

Wall Street sell-side analysts issued a moderate sell recommendation rating for this stock and established an average target price of $207.75, which reflects a 7.2% downside from the share price of $223.79 at close on Friday.

The stock has a market capitalization of $14.42 billion, a price-book ratio of 126.15 compared to the industry median of 4.45 and a price-sales ratio of 6.61 versus the industry median of 3.63.

Despite poor share price performance, the stock still looks overvalued according to the Peter Lynch chart.

The 14-day relative strength index of 38 suggests that the stock is not far from oversold levels.

Banc of California

Shares of the Santa Ana, California-regional bank underperformed the S&P 500 by 7.3% year-to-date, 13.3% in the past year and 42% in the past two years through Jan. 31.

Banc of California paid a quarterly cash dividend of 6 cents per common share on Jan. 2, 2020. The dividend has decreased by 14.2% over the past three years.

Wall Street sell-side analysts issued a moderate sell recommendation rating for this stock and established an average target price of $15 per share, which represents a 6% decline from the share price of $15.96 at close on Friday.

The stock has a market capitalization of $812.11 million, a price-sales ratio of $2.99 versus the industry median of 2.88 and a price-book ratio of 1.13 compared to the industry median of 1.04.

The share price still seems overvalued according to the Peter Lynch chart.

The 14-day relative strength index of 36 suggests that the stock is approaching oversold levels.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.