Why Did My Stock Just Die?
CAPS Rating(out of 5)
|AMR (NYS: AMR)||*||(32.1%)|
|Blyth (NYS: BTH)||*||(14.6%)|
Source: Motley Fool CAPS.
With the Dow tumbling 199 points on Thursday, or 1.6%, stocks that went down by even larger percentages are pretty big deals.
Just the other day, I said I really didn't see the utility in THQ's uDraw GameTablet and that analysts were equally doubtful the company would be able to pull off the sale of the 3 million units it had projected. Turns out, us doubting Thomases had good cause to doubt, as the game maker cut its expected third-quarter revenue by 25%. Sales of the device for Microsoft's Xbox 360 and Sony's (NYS: SNE) PlayStation 3 consoles haven't materialized.
While sales of its new hit Saints Row are expected to do as well as it previously said (or better), it had been putting a lot of stock in uDraw, particularly after the tablet got off to a successful start last year. The company now thinks revenue will be in the range of $382.5 million to $412.5 million, well below analyst expectations.
Although more than three-quarters of the CAPS All-Stars rating the game maker indicated they thought it would outperform the broad indexes, the low two-star rating they assigned to it suggests they believe there are better places for your money. Add THQ to your watchlist and let us know in the comments section below whether you think the stock deserves to have been drawn and quartered.
I also thought it a dubious achievement that American Airlines parent AMR jetted 25% higher last week, because it was under bankruptcy court protection, and the likelihood that investors and employees alike would come out the worse for it was great. Yesterday AMR belly-flopped on the market's runway, though it wasn't alone. The CAPS airlines sector was down more than 5% on average -- United Continental (NYS: UAL) and Delta Air Lines (NYS: DAL) were down about 4.5% each -- though none fared as poorly as AMR.
According to the International Air Transport Association, airlines generally are on track to earn almost $7 billion in profits this year, though considering AMR's bankruptcy filing, it's not evenly distributed. Next year is looking turbulent, though, as IATA expects margins to drop to just half of this year's levels.
The financial crisis in Europe will determine how a lot of this plays out, but Germany's opposition to certain key aspects of the plan being worked out upset the markets yesterday, and didn't help AMR shares any. CAPS All-Star asonnetjolt sees the airline's stock ultimately becoming worthless, but you can tell us on the AMR CAPS page or in the comments section below if you agree, and then follow along by adding it to the Fool's portfolio tracker.
Blithely on its merry way
Maybe home-goods retailer Blyth is burning a candle at both ends. After a big (though hardly straight) run-up this year -- shares are up 73% year to date, even after yesterday's stumble -- it's not surprising a third-quarter earnings report that offered a potpourri of outcomes would send the stock down.
Results came in short of analyst expectations, but it reaffirmed its outlook for the year. Offsetting penalties, you say? Well, it also said cash flows would dry up a bit and it was going to change its fiscal year to coincide with the calendar year for good measure. So many moving parts causes confusion, and there's no room for uncertainty in this market.
Like Amway or Tupperware (NYS: TUP) , Blyth sells most of its wares through home parties where independent salespeople host friends and family to gather round and buy candles, accessories, and seasonal decorations. It also offers weight-management products, nutritional supplements, and energy drinks, just as competitor Herbalife does. Blyth says its independent contractor counts are back at levels it achieved last year, which shows momentum in its favor, but with everything else going on, multilevel marketing is not the most stable business.
With just 40% of CAPS members rating Blyth thinking it can beat the Street, it's clear the MLM specialist isn't a community favorite. Add Blyth to your watchlist and see whether its stock will continue to melt.
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. With CAPS, you can decide for yourself whether your stock is ready to come back from the dead.
At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Tupperware Brands. 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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