Why Did My Stock Just Die?
Your stock just took a nosedive -- but 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.
CAPS Rating(out of 5)
|Amtech Systems (NAS: ASYS)||****||(33.2%)|
|SatCon Technology (NAS: SATC)||***||(25.2%)|
|KV Pharmaceuticals (NYS: KV.A)||***||(23.0%)|
Easy come, easy go. What the market giveth, it can just as easily taketh away, and it did more than once this week. Volatility, thy name is the stock market. So stocks that went down by even larger percentages are pretty big deals.
The devil's in the details
Solar-components maker Amtech System reported record revenue growth as sales surged 67% while profits soared 88% year over year. So of course it was a big loser on the market.
Amtech reported that orders were down sharply in the third quarter, falling to $13.5 million from $72.5 million -- an 80% drop -- while the solar component of those orders plummeted nearly 90%. Even though it still has more than $140 million in its backlog, Fools know that backlog never neatly translates into new revenues. It's a guidepost, perhaps, but no roadmap to follow.
But as 98% of the CAPS members rating the solar-parts specialist believe it will outperform the broad market averages, it's apparent that they believe it will be successful in diversifying into new technologies such as its solar ion implant project. Let us know on the Ametech Systems CAPS page or in the comments section below whether you think there's still money to be made.
We're all in this together
That sort of weakness spilled over into the results of Satcon Technology, which saw revenues drop 27% from the first quarter. Europe and Asia were the culprits here, too, and having been stuck with excess inventory, it took larger-than-normal writedowns that led to larger-than-expected losses.
The market shouldn't have been so surprised by what was going on, since Satcon previously announced that the quarter wasn't going to be so hot. It's just the latest string in a growing list of solar PV companies disappointing the market as subsidy cuts in Europe hurt margins. It also issued guidance for the third quarter that also underwhelmed. It figures it will generate somewhere between $45 million and $52 million, when analysts had been expecting $62 million.
With Power-One (NAS: PWER) not exactly lighting up the market, either, not many people were expecting the second quarter to be a good one for the industry anyway, so a lot of this might be "big bath" accounting. The industry is wiping the books clean now to make results look better later. But there might be some hope that even if European demand is weak, U.S. demand could pick up some of the slack. Indeed, the U.S. market has been what's offered sustenance; it was Satcon's strongest-performing region.
Highly rated CAPS All-Star Trimalerus says the industry will get through this down cycle and Satcon will grow once again.
Inverter manufacturers have been hit hard by the lack of sufficient sales of Solar panels. This company is ramping up materials production in anticipation of increased sales in the next year or so. I like green tech stocks & now is a good time to buy as market conditions have deflated stock values.
Add Satcon to the Fool's free portfolio tracker to keep up to date on whether it can make the investments necessary to find its way to growth again.
Specialty pharmaceutical KV Pharmaceuticals filed its quarterly report the other day, and the drain on its business that its overpriced drug Makena represents was still apparent.
To recap, KV outraged just about everyone earlier this year, when it announced a pricing scheme for the drug that made it look as if it was trying to profit off at-risk babies. To quell the uproar, KV first offered financial assistance to those who couldn't afford the $1,500-per-dose cost and then cut the price to $690 when that did little to mollify anyone.
The FDA then weighed in and said it wouldn't grant Makena exclusivity, meaning the original lower-cost options would still be available. The PR disaster was reflected in KV's quarterly results. Revenues were only 2% higher than a year ago, when it had no Makena sales, and it's shipped only 200 more vials than it did when it reported full-year results. It did note, though, that shipments per week rose 39% to 160 vials, compared with the 115 per week it recorded in the first weeks after the drug was launched.
High-priced drugs are sinking a number of pharmaceutical stocks these days, including Dendreon (NAS: DNDN) , which found it was unable to overcome the "buy-and-bill" method of reimbursement from Medicare. With doctors having to shell out $93,000 for Provenge first, with no guarantee of getting the money back, sales have been lackluster to say the least.
While I'm a little surprised that 93% of the CAPS members rating KV still think it will outperform the broad market averages, its low, two-star rating suggests that they also believe there's better places for your money. You can follow along on KV's progress by adding it to your watchlist, and let us know on the KV Pharmaceuticals CAPS page whether you think investors can afford to wait for sales to take off.
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. You can decide for yourself whether it's ready to come back from the dead.
At the time this article was published The Motley Fool owns shares of Power-One and Dendreon. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Rich Duprey has no financial position in any of the stocks mentioned in the article. You can see his holdings. The Motley Fool has a disclosure policy.
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