Hope for financial stability in Europe drove U.S. markets higher again. 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)
Crocs (NAS: CROX)
New Oriental Education & Technology (NYS: EDU)
Sequenom (NAS: SQNM)
Source: Yahoo! Finance; Motley Fool CAPS.
With the Dow Jones Industrial Average (INDEX: ^DJI) rising 180 points yesterday, or 1.6%, stocks that went down are pretty big deals.
A kick in the pants
Last month, I suggested that Crocs needed to show that it was more than just another shoemaker. Like Deckers Outdoor (NAS: DECK) , it has moved from fad to mainstream, offering a wide variety of shoes and styles more along the lines of a Nike (NYS: NKE) .
Yet in making the transition, it also ran the risk of becoming another me-too shoe company, one that gets lost in the melange of uppers and soles. I thought its Croslite material gave it enough differentiation, but Crocs announced yesterday it was lowering guidance for revenues and profits, as economic weakness here and abroad apparently takes its toll.
Of course, with Crocs, that immediately dredges up ghosts of years past when it was suddenly saddled with mountains of inventory it couldn't move. Still, slashing nearly 40% of its market cap doesn't make much sense at this time, either, as the shoemaker today isn't the same company it was just two years ago.
I've gone to the Crocs CAPS page and marked the company to bounce back over the next year or so, ultimately outperforming the broad indexes. Join me there and tell me your views on its future, then add the stock to the Fool's free portfolio tracker to see if we're right.
Shares of Chinese private educator New Oriental Education & Technology got sent back a grade after reporting earnings that exceeded expectations. Maybe it's the market that should be wearing the dunce cap.
Not only were results ahead of forecasts, but guidance was in line with what analysts were expecting, so getting detention as it did doesn't make much sense. What seemed to spook investors was narrowing operating margins. Because of New Oriental's expansion plans -- it wants to open 100 to 110 learning centers, with about a fifth of them being so-called VIP classes with fewer students -- margins will get pinched from the smaller class sizes.
New Oriental appears to have sidestepped the cloud of doubt hanging over a number of Chinese issues, and unlike U.S. counterparts Apollo Group (NAS: APOL) and Corinthian Colleges (NAS: COCO) , which are fending off potential increased regulation of for-profit schools, it has clear unfettered growth prospects.
Highly rated CAPS All-Star member kkconway recognizes the importance of education to the Chinese and their access to it in a growing middle class:
Day traders are playing with this stock like cat and mouse or orca and baby seal -- sorry --it's just lunch. But that only makes this a great time for buy and holds to pick some up on the cheap! Oh, did I mention millions of Chinese only children indulged by their parents with the best of everything? EDU is growing on back of that trend.
Add New Oriental Education to your watchlist and let us know in the comments section below whether you think it will move to the head of the class.
A day after shares of Sequenom popped on news it was finally introducing its much-improved fetal Down Syndrome test, the stock gave it all back and then some. Like Crocs and New Oriental, this seems a bit much to me.
Sequenom was able to pretty much replicate the compromised data that doomed the stock initially (which shows what a waste it was to have compromised them in the first place), and with the test being a much safer alternative than amniocentesis, it's bound to get a strong medical following. Moreover, the company has other products on the market generating revenues for it.
I'm rating Sequenom to beat the Street because clarity has been given to the situation and the runway is clear for it to take off. Head over to the Sequenom CAPS page and let us know if it passes your test for investing, then add it to your watchlist to see if it can gain back all the value it's lost over the past few years.
At the time thisarticle was published Fool contributorRich Dupreyowns shares of Nike, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of Nike and New Oriental Education, as well as creating a diagonal call position in Nike. 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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