Why Did My Stock Just Fall Apart?
CAPS Rating(out of 5)
|Wet Seal (NAS: WTSLA)||***||(12.5%)|
|BPZ Resources (NYS: BPZ)||****||(8.9%)|
|Natuzzi (NYS: NTZ)||***||(6.7%)|
Source: Motley Fool CAPS.
With the Dow Jones Industrial Average (INDEX: ^DJI) jumping 183 points on Thursday, or 1.7%, stocks that went down are pretty big deals.
Home for the holidays
We really haven't been hearing much from retailers these days on plans for the big holiday shopping season that's fast approaching, other than some muted optimism. There have been some exceptions -- Kohl's is planning to hire 40,000 temporary workers, for example, and Macy's (NYS: M) is hiring 78,000 -- but others such as Best Buy (NYS: BBY) are planning on hiring fewer workers than in previous years.
That may be because the back-to-school season was a hit-or-miss proposition for many. September comps came out, and while some recessionary highfliers like The Buckle churned out 10% higher comps, Gap and Wet Seal saw declines. With the unemployment rate still stuck north of 9%, there's simply not going to be as much holiday cheer this year.
Wet Seal had been doing well for most of the year selling its teen and women's fashions, and the September drop was its first in 2011. Although sales slowed as the quarter progressed, the retailer reiterated its earnings guidance (but did drop its comps forecast to mid-single digits).
CAPS member floridaoranges wondered how it could fail, considering its target demographic: "Aimed at 15-45 year old women who love shopping for new clothes...how can it miss? Growth looks very predictable on this one based on history." Maybe this grinding recession is just taking its toll.
Share your thoughts on the Wet Seal CAPS page if you think it will look threadbare come Christmas, then put it on your watchlist to keep track of its progress.
A crude assessment
Independent oil and gas producer BPZ Resources seems to have been hit with analyst ennui, though the stock reacted strongly to their assessments. A series of downgrades over the past few days drove BPZ lower, with SunTrust, Wunderlich, and Rodman & Renshaw all cutting their views of the company.
BPZ drills primarily in Peru. It has had its share of problems, such as when it ran into a dry hole at its Albacora field off the Peruvian coast and had to suspend operations to conserve money, but it's looking to bring the area to commercial production by year's end.
The lowered outlook for BPZ isn't necessarily company-specific. For instance, Wunderlich downgraded a host of oil and gas producers due to expectations of lower crude oil prices. Abraxas Petroleum (NAS: AXAS) , Clayton Williams Energy, and Endeavour International were among the stocks getting the downgrade axe.
With 96% of the CAPS community rating BPZ thinking it can beat the market averages, it's apparent that these Fools think the long-term trend for oil and gas is well positioned, whatever the near-term prospects are. Tell us in the comments section below or on the BPZ Resources CAPS page where you see the next growth driver coming from, and add the stock to your watchlist to be notified when it occurs.
Although Natuzzi's name reminds me of a 1960s dance craze made popular by the song "The Wah-Watusi," the furniture maker's stock has been in a conga line headed straight down lately, with its stock sitting 40% below its 52-week high from six months ago.
That's not surprising, really, since making fine leather furniture is going to be a rough go in a recession. Sales in the second quarter were down more than 16% companywide, and in particular, upholstery sales were off 26% in the Americas alone, where it derives more than a third of its revenues. More than half its sales come from Europe, but its home country of Italy remains a financial basket case these days.
Another luxury furniture retailer, Ethan Allen (NYS: ETH) , will be reporting quarterly results later this month. That will let us see if Natuzzi's results are company-specific or part of a larger trend.
With 85% of CAPS members rating the stock thinking Natuzzi won't take its lower performance lying down, you can sit back and relax while digging into additional insights on the Natuzzi CAPS page. Then put your feet up and add the stock to the Fool's free portfolio tracker to keep track of its progress.
At the time this article was published Fool contributorRich Dupreyowns shares of Best Buy, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Gap and Best Buy. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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