Why Did My Stock Just Die?
Your stock just took a nosedive -- but don't panic. First, let's see whether it had good reason to fall. Sometimes, panic-fueled drops can make excellent buying opportunities. Here's the latest crop of cratered stocks that could provide a possibility for profit.
CAPS Rating(out of 5)
|Stratasys (NAS: SSYS)|
|Juniper Networks (NYS: JNPR)|
|Flagstar Bancorp (NYS: FBC)|
The clock is ticking down to the debt ceiling deadline, and with each side playing a dangerous game of brinkmanship, the Dow tumbled 198 points yesterday, or 1.6%. So stocks that went down by even larger percentages are pretty big deals.
You can't print money
You have to admit that the concept of 3-D printing systems is kind of cool. Printing out an actual object rather than a two-dimensional sheet of paper conjures up all kinds of things we might want to make copies of. Unfortunately for leading 3-D printer Stratasys, its earnings report was even flatter than that, as revenues widely missed expectations despite a beat on profits.
Selling printers that can cost tens of thousands of dollars can present problems in tough economic times, but even rival 3-D Systems, which is trying to make a consumer line of 3-D printers, fell in sympathy with Stratasys -- and with its own earnings due out today, 3-D may end up dropping a whole lot more.
Considering that the business is still quite profitable, the CAPS community is thinking the drop in value was overdone. All-Stars such as chty18 and colddrink73 think the overreaction represents a good place to look for a rebound.
Let us know on the Stratasys CAPS page or in the comments section below whether you think an investment in 3-D printing systems will be like printing money.
Networking your way to losses
Economic fears are even more pronounced in the networking equipment market than in an esoteric niche like 3-D printing systems. Juniper Networks seemed to echo the concerns Cisco (NAS: CSCO) raised recently when it said businesses are delaying expenditures because of the uncertainty surrounding the economy. Not only did its second-quarter results come in below its own guidance, but its forecasts for the coming quarters were particularly dour.
Both AT&T and Verizon have said they'll be spending less in the back half of 2011 than they normally would, which is a big concern to equipment makers since the carriers typically spend more than they do in the first half. Thus, the lower spending will be magnified for Cisco, F5 Networks, and JDS Uniphase (NAS: JDSU) . Both F5 and Riverbed Technology (NAS: RVBD) saw their shares tumble recently after revenues came up short.
CAPS member diamondmickey had hoped that new contracts Juniper signed would be enough to turn things around, but he still sees it as sufficiently capitalized to weather any storms: "The company is adequately solvent both in the short and long term. It has seen a steady increase in assets for the past 4 quarters and a decline in liabilities between last quarter and this and has more than enough cash to pay off its long term debt outright."
Equip yourself with greater insights by checking out the Juniper Networks CAPS page and by adding the stock to Fool's free portfolio tracker.
Bank error not in your favor
Investors also deposited Flagstar Bancorp in the discount bin after earnings were overdrawn, but the announced sale of 27 branches to PNC Financial (NYS: PNC) ought to let it focus on its major markets and turn itself around. Still, nonperforming loans continue to hamper Flagstar's efforts.
Though allowances for loan losses account for a smaller percentage of loans held for investment (and of its non-performing loans), it's actually a larger dollar amount than it was a year ago. So the bank has sold off a bunch of loans, but it's already counting on the ones that are left to be less troublesome.
Wall Street was of the unanimous opinion that Flagstar would beat the indexes, but CAPS All-Star members were a bit more circumspect in their appraisal, with only 60% thinking it could do so. You can follow along on its development by adding it to your watchlist and depositing your thoughts on the Flagstar Bancorp CAPS page.
Ready for a resurrection
Just because your stock has taken a beating, that doesn't mean it's going to roll over and die. Markets are known for overreacting. A closer look on Motley Fool CAPS at what's happened to your stock can give you an edge over other investors who just react to the market's lead. You can decide for yourself whether it's ready to come back from the dead.
At the time this article was published The Motley Fool owns shares of 3D Systems and Cisco and has created a bull call spread position on Cisco. Motley Fool newsletter services have recommended buying shares of Stratasys, AT&T, Riverbed Technology, and Cisco, as well as shorting Juniper Networks. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Rich Duprey owns shares of Cisco but has no financial position in any of the other stocks mentioned in the article. You can see his holdings. The Motley Fool has a disclosure policy.
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