Why Did My Stock Just Die?
CAPS Rating (out of 5)
|Unisys (NYS: UIS)||****||(14.1%)|
|USEC (NYS: USU)||****||(12.6%)|
Source: Motley Fool CAPS.
The Dow jumped 84 points yesterday, so stocks that went down this much are pretty big deals.
Finding a clear path
It's obvious that the restructuring going on at global IT specialist Unisys is still a work in progress. While meeting analyst expectations on profits that admittedly were a third lower than what it reported a year ago, Unisys came up short of revenue forecasts, $985.3 million to an anticipated $1.02 billion.
Federal government spending continues to serve as a drag on its performance, dropping 18% as a contract with the Transportation Security Administration ended. But demand for its ClearPath software and servers remains strong and stable. Federal dollars have been on the decline for several quarters now, and relying on government largesse can be a dicey proposition, accounting for a lot of the volatility Unisys experiences. With Accenture (NYS: ACN) and IBM having a much broader mix of revenue coming from both government and private sector sources, investors might be better served looking to them instead.
The ClearPath solution is the path Unisys will need to take to bolster its future. Technology gross margins improved to 65.9%, a 940-basis-point jump, compared to the year-ago quarter, while operating margins saw a 760-point improvement.
Add the IT specialist to your watchlist to see if there's additional value to be found in its stock, and head over to the Unisys CAPS page and let us know if you see the path ahead for its future.
Up in smoke
Perhaps it was the leak at the San Onofre nuclear plant in California that caused USEC's shares to leak value yesterday. After the Fukushima disaster in Japan last year, the last thing the nuclear power industry needs is the possibility of another meltdown occurring, particularly here at home. Yet any possible connection is unclear, since the leak didn't affect uranium miners Cameco (NYS: CCJ) or Denison Mines (ASE: DNN) , both of which saw their shares rise yesterday despite their having at least as much at stake in the nuclear power industry.
USEC is still trying to generate support for its centrifuge facility, but continues to run into opposition that point to its weak financial condition and sketchy partnerships. Massachusetts Rep. Ed Markey also expressed concern about USEC's joining hands with Russian company TENEX, citing concerns that TENEX's parent is supplying nuclear fuel to Iran. The Energy Department also had to agree recently to assume $44 million of its liability for waste disposal so that it could plow a like amount into shoring up its finances.
I marked USEC on CAPS to underperform the broad market averages last year, expecting its failure to gain the DOE loan it sought would sink its fortunes. Add USEC to your watchlist to see whether it can overcome the hurdles that are being put in its path.
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. Balance out the extremes by having a mix of stocks, funds, and ETFs that will help you maximize your retirement savings. You can find them in The Motley Fool's brand-new report, "The Shocking Can't-Miss Truth About Your Retirement." This is a special free report that you can access right now simply by clicking here -- it's free.
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 IBM.Motley Fool newsletter serviceshave recommended buying shares of Accenture and Cameco. 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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