Kraft Heinz and Helmerich & Payne Hit the Casualty List

July 7, 2025 -

Give me your battered, your cheap,

Your wounded stocks that crave a second chance,

The wretched refuse of the market's heap.

They've stumbled, yet they soon again may dance.

That little poem (with apologies to Emma Lazarus) sums up the idea behind my Casualty List. It's a roster of stocks that have been banged up in the latest quarter, and that I think can recover and thrive.

There aren't 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 buy ratings among the 24 Wall Street denizens who cover it.

As a contrarian, this gets me interested. The company's well-known brands include Heinz, Kraft, Oscar Mayer, Philadelphia (cream cheese) and Velveeta. Income investors should like -- maybe love -- the stock's 6% dividend yield.

Bluntly, there's been no growth here. But the stock price has fallen to a point where I think it's a buy. The shares sell for less than book value (corporate net worth per share).

Sylvamo

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's 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't arrived yet, and since Sylvamo predicts that its results will improve in the second half of this year, I think the stock's 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's 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's 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.

Centene

President Trump's big beautiful bill 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's 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.

The Record

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's 500 Total Return Index at 11.5%.

Bear in mind that my column results are hypothetical and shouldn't be confused with results I obtain for clients. Also, past performance doesn't 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's column.

John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts. He or his clients may own or trade securities discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.