Why Did My Stock Just Die?

Before you go, we thought you'd like these...
Before you go close icon
The markets reversed course again, but your stock took an even bigger nosedive. 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:

Stock

CAPS Rating
(out of 5)

Thursday's Change

SAIC (NYS: SAI) ****(13.5%)
Delcath Systems (NAS: DCTH) **(11.1%)
OpenWave Systems (NAS: OPWV) **(10.0%)

With the Dow Jones Industrial Average (INDEX: ^DJI) tumbling 120 points yesterday, or 1%, as the employment picture remains exceptionally weak, stocks that went down harder are pretty big deals.

It's never easy
At government contractor SAIC, second-quarter revenues fell 6% as squabbles over government contracts impeded its ability to get new business. It said "the lack of funding for ongoing programs and for ramping up new work drove a shortfall" in revenues and profits.

With deficits as far as the eye can see and the prospects for better conditions in the future bleak, SAIC reduced full-year guidance. It didn't help that SAIC and Boeing (NYS: BA) lost out last week to BAE Systems and General Dynamics to build new ground combat vehicles for the military.

CAPS All-Stars are still supportive of the defense contractor, with 97% of those rating it seeing it coming out ahead of the broad indexes. Add SAIC to the Fools' new My Watchlist feature if you think it go on the offensive.

Looking for a cure
Chemotherapy can stop cancer in its tracks, but it takes a heavy toll on the body. Patients with liver cancer, for example, will find other organs affected by the therapy. A better bet would be to allow for localized chemotherapy treatment on just the affected organ.

That's what Delcath Systems has been trying to achieve with its chemosaturation system, which allows for the administration of high-dose chemo drugs to just the diseased organs or afflicted areas of the body. Unfortunately, it's had middling success and has been beset by other problems,  as well. Shares trade more than 60% lower than where they were at the start of the year.

The bulk of that decline occurred back in February when the FDA began handing out "refuse to file" letters like they were candy on Halloween. Not only did Delcath get one because the agency wanted more information on its manufacturing processes, but Gilead Sciences, Johnson & Johnson, and Santarus all got letters within weeks of each other.

Delcath's latest stumble, though, was that its chemo system didn't prove effective on patients with colorectal cancer. Indicating the hit-or-miss nature of the treatment, last week it reported strong, positive results in patients with primary liver cancer. The biotech said it would continue testing colorectal cancer patients with new tests starting in the second half of next year.

The CAPS community remains hopeful, with 87% of those rating Delcath believing it will beat the market averages. Let us know on the Delcath Systems CAPS page your diagnosis of its future.

Unsure of itself
Ho-hum. Another day, another allegation of mobile technology patent infringement. OpenWave Technology joined the growing list of tech companies suing someone for infringing on patented technology. And since everyone else is suing Apple and Research In Motion (NAS: RIMM) , OpenWave painted a bull's-eye on them, too.

Companies must protect their intellectual property and actually have a duty to their shareholders to do so. But because OpenWave has been losing money hand over fist, maybe investors thought resorting to the courtroom was a signal it's about ready to throw in the towel.

Of course, with the tens of billions of dollars being thrown at mobile technology patents these days, OpenWave might just have wanted to run up the flagpole that it has valuable patents, too, should any buyer be interested.

Despite 88% of the nearly 200 CAPS members rating OpenWave marking it to outperform the market, the low two-star rating they've bestowed on it suggests there are better places for your money. You can let us know on the OpenWave Technology CAPS page whether there's method to its madness of going the expensive litigation route.

Ready for a resurrection
Just because your stock has taken a beating 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 Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Johnson & Johnson, Apple, General Dynamics, SAIC, and Research In Motion. Motley Fool newsletter services have recommended buying shares of Gilead Sciences, Apple, and Johnson & Johnson, as well as creating a bull call spread position in Apple and a diagonal call position in Johnson & Johnson. 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 Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners