"We've likely all heard about the Dogs of the Dow strategy by now, which entails buying up the highest-yielding, often worst-performing stocks within the Dow Jones Industrial Average at the start of the new year. And while the approach might not help investors gain a market-beating leg up, I do think that some variant of the approach can be applied to other indices."
"Of course, buying the laggards isn't an effective strategy, as losers can continue losing, not only into the next year but for many years to come, especially if there are structural issues at a firm or if headwinds facing it are too challenging for management to overcome. Either way, picking from the list of laggards and analyzing each individual name can be an intriguing way to spot value in a market that some would argue is getting kind of expensive."
The Dogs of the Dow strategy involves buying the highest-yielding, worst-performing Dow stocks at the start of a new year. A similar variant can target Nasdaq 100 laggards despite the index's low dividend yields. Buying laggards carries risk because losses can persist, but careful selection and analysis can reveal value in an otherwise expensive market. Value-conscious investors may consider unloved names that possess turnaround plans, capable management, or catalysts for renewed earnings growth or multiple expansion. Two bottom-10 Nasdaq 100 performers are highlighted as potential deals, including Lululemon.
Read at 24/7 Wall St.
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