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)
SodaStream International (NAS: SODA)
Learning Tree International (NAS: LTRE)
Briggs & Stratton (NYS: BGG)
Whee! Isn't this fun? Did anyone else get seasick from the rolling waves of the market's tumult this week? With all the huge up-and-down moves, stocks that went down by even larger percentages are pretty big deals.
The devil's in the details
As much as I'm not a fan of SodaStream as an investment, thinking it borders on faddishness, I'm surprised the market agreed with my assessment that there was too much froth built into the soda maker's stock. Yet when investors swipe a third of the company's value because it allegedly issued "cautious" guidance -- ignoring completely that it previously raised guidance the quarter before -- then shareholders have to be ready for a bumpy ride.
Having put its soda-making machines in Bed Bath & Beyond (NAS: BBBY) and Best Buy (NYS: BBY) , unit sales and consumables in the Americas tripled while flavor units nearly doubled. As CAPS member wolfhounds recently commented, the market ignored what SodaStream's CEO said about his company and failed to notice the nuances in its earnings guidance.
First, he cited the huge increase in installed base in the second half of 2010 for comparison. I think he was being conservative given the second thing he spoke about was the dramatic increase in repeat usage in the U.S. compared to the rest of the world. And if anyone was paying attention, he also said [Q2] earnings would INCLUDE comp expense (about $1m). Previously, they reported this as a non GAAP item. So, this isn't apples to apples.
While a third of the CAPS All-Stars rating the drink maker have doubts about its ability to beat the broad market averages, the broader community is more supportive. You can tell us on the SodaStream CAPS page or in the comments section below whether you think there's still some fizz left in its business.
We're all in this together
Unlike Apollo Group (NYS: APOL) or DeVry, which provide educational services over a broad range of subjects, Learning Tree International gears its educational opportunities toward managers and IT professionals. Its stock got hammered when revenues in the latest quarter came in flat while operating expenses jumped 5%, primarily for general and administrative items.
To lower its costs going forward, Learning Tree is looking to boost sales by introducing new courses that might prove more attractive to prospective students as well as offer more instructor-led online courses. Learning Tree operates in the United States, Canada, the U.K., France, Sweden, and Japan.
With 94% of CAPS members rating the educational-services provider to outperform the broad market averages, it's apparent that they think it can still go to the head of the class. Add Learning Tree International to the Fool's free portfolio tracker to keep up to date on whether it will find its way to growth or become a dunce for investors.
A sputtering motor
Small-engine and outdoor power-equipment maker Briggs & Stratton reversed an $18 million profit last year into a nearly identical loss this time around, as its engines segment suffered from a 13% drop in shipment volumes. A hefty goodwill writedown also hurt numbers. Industrywide, sales in the lawn and garden market dropped by double-digit rates over the full year, reflecting the tough environment that mass-merchandise retailers like Home Depot and Lowe's have endured from the horrible housing market.
Briggs & Stratton sells about half of all the engines it makes to three companies -- Husqvarna, MTD, and Deere (NYS: DE) .
Some analysts expect the market for lawn and garden equipment to rebound based on a housing recovery. The Freedonia Group expects the segment to grow almost 6% annually through 2015, but I have a hard time seeing that, considering housing's current malaise. Some housing experts don't expect the industry to recover until 2015, so expecting power equipment to grow into that market is difficult to imagine.
With almost a third of CAPS members rating the engine maker to underperform the market, it seems they're not too enthusiastic, either. You can mow a path to the Briggs & Stratton CAPS page and let us know whether you think it can start revving its engines again.
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 thisarticle was published The Motley Fool owns shares of Best Buy. Motley Fool newsletter services have recommended buying shares of Lowe's, SodaStream International, Best Buy, Home Depot, and Bed Bath & Beyond and writing covered calls in Lowe's. 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 owns shares of Best Buy but has no financial position in any of the other stocks mentioned in the article. You can see his holdings. The Motley Fool has a disclosure policy.
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