Goodyear Tire & Rubber Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Goodyear Tire & Rubber (NYS: GT) rolled downhill 11% on Thursday after a Wall Street analyst downgraded the tire specialist.

So what: Goldman Sachs lowered its rating on Goodyear not one but two notches from "neutral" to "sell," painting an extra-bleak picture for investors. Goldman predicts that high raw material costs will weigh heavily on the company's short-term earnings, and when Goldman speaks, Mr. Market usually listens.

Now what: I'd look into this plunge as a possible buying opportunity. Even with light shipments and rising costs, the company managed to grow its second-quarter top and bottom line 24% and 67%, respectively, suggesting that Goldman's two-notch downgrade is a tad on the harsh side. With operating efficiency greatly improving lately and a forward P/E of only 5.3, Goodyear seems poised for a bounce.

Interested in more info on Goodyear?Add it to your watchlist.

At the time this article was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool'sdisclosure policyalways gets a perfect score.

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