Why Did My Stock Just Get Crushed?
U.S. markets tumbled as Europe's economy balances on the precipice. Although your stock took a nosedive, 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)
|Bank of Ireland (NYS: IRE)||***||(17.1%)|
|Canadian Solar (NAS: CSIQ)||**||(13.7%)|
|Rubicon Technology (NAS: RBCN)||**||(11.4%)|
With the Dow Jones Industrial Average (INDEX: ^DJI) plummeting 247 points yesterday, or 2.1%, stocks that went down by even larger percentages are pretty big deals.
Slippery as Greece
Since a definitive timeline now hangs over Europe's head like a sword of Damocles, the pressure on financial institutions like Bank of Ireland and Banco Santander grows as well. The Oct. 23 meeting in Brussels is now no longer expected to produce a quick fix to the crisis, after Germany said any repair would take a long time to be realized.
Greece isn't helping matters, as unions prepared to launch "the mother of all strikes" in the country to protest the government's austerity plan. Workers are calling for a 48-hour general strike. National Bank of Greece (NYS: NBG) simply withers away on the vine, down 78% from its 52-week highs and off 30% in the past month alone.
Bank of Ireland's 1-for-10 reverse stock split did nothing to stop its losses. Investors still cling to the "too big to fail notion," figuring the amount of money the government's sunk into the bank will prevent it from letting it go under. While I rated it to underperform the markets almost a year ago, almost 93% of those also weighing in believe the Irish bank can still win the day.
Let us know in the comments section below or on the Bank of Ireland CAPS page whether you think the reverse split only delays the inevitable, and add it to your watchlist to be notified of the latest developments.
A dark future
Chinese solar-panel maker Canadian Solar is merely just the latest solar shop to rein in the expectations of investors who thought the industry could somehow break out from behind the clouds. It reported that profit margins will shrink in the coming quarter as sales continue to slip.
When even Chinese panel makers can't make profits, you know there are problems. SunPower (NAS: SPWRA) reduced full-year revenue and profit guidance, and LDK Solar slashed revenue guidance. Without all the subsidies that once propped up the industry, no one wants to buy a system. Even much-ballyhooed Solyndra couldn't survive, even though its customers enjoyed an extra 30% tax benefit from a private-letter ruling from the IRS.
Although some CAPS All-Stars, such as EnigmaDude, believe solar will rise again, it looks as if the industry is in for a dark and stormy night that could last a good long time. Add Canadian Solar to your watchlist and let us know in the comments section how long you think it will be before the clouds pass.
Another industry that was supposed to have a bright future was LED lighting, but as it has matured and gone mainstream, margins have compressed faster than anticipated, leaving the leading lights of the industry -- including Aixtron, Cree (NAS: CREE) , and Veeco Instruments -- looking like dim bulbs indeed. Analysts also think there's more than a few that will burn out before long.
Last week, an analyst at Piper Jaffray said Chinese subsidies have created a glut that will take years to work off, leading him to downgrade both Veeco and Rubicon Technology. While that subsidy program ended, the effects remain. If TV demand would perk up, growth might be realized from the need for LED backlighting, but that's not happening, either.
I'm not the only one who had a bright idea that LEDs would take off (I own shares of Aixtron), as 82% of the CAPS All-Stars rating Rubicon also thought it would outperform the market indexes.
Put the LED specialist into the Fool's free portfolio tracker, and tell us on the Rubicon Technology CAPS page whether you think the industry will light the way forward 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 this article was published Fool contributorRich Dupreyowns shares of Aixtron, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't 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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