Why Did My Stock Just Die?
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)
|Acme Packet (NAS: APKT)||***||(20.4%)|
|Calix (NAS: CALX)||**||(18.8%)|
|USEC (NYS: USU)||****||(9.7%)|
With the Dow Jones Industrial Average (NYSE: ^DJI) soaring 267 points on Friday, or 2.3%, stocks that went down are pretty big deals.
I don't know what the market was so surprised about when Acme Packet reported third-quarter earnings last week, considering it warned at the beginning of the month that it would be missing estimates. It said AT&T (NYS: T) was the cause of the miss, delaying an order that Acme says will come through this quarter. While that sounds like a timing issue, analysts were expecting Acme to put up strong numbers for the quarter by itself -- but now it looks like things will otherwise be flat. Seems the shorts knew what they were talking about.
Another AT&T customer, Powerwave, also cratered last week when it said revenues were going to be less than half what Wall Street was anticipating.
There was a lot being made over delayed capex spending by AT&T and Verizon (NYS: VZ) early on, with the latter scaling back its FiOS rollout only to those areas where it had already made a commitment. But Ma Bell's own earnings actually showed higher capex spending than anticipated. While Acme was confident of its positioning still, it may mean one of its rivals is stealing share from its largest customer.
With 89% of the 574 CAPS members rating Acme to outperform the market, it's clear they still expect it to get its due. You can tell us on the Acme Packet CAPS page or in the comments section below if you agree, and then see whether AT&T follows through by adding it to the Fool's portfolio tracker.
Broadband's narrow chance
Broadband equipment provider Calix also got walloped as the reality of its revised guidance last month came to pass when it reported third-quarter earnings. But this doesn't appear to be a temporary issue, even if it's something of a timing one.
Back in May I noted that Calix had a short and risky window of opportunity based on President Obama's stimulus-spending program. Some $7.2 billion was appropriated for broadband projects, and all funds needed to be spent by September 2013. Turns out the window is slamming shut a lot faster than expected. Those stimulus funds have been a long time in flowing through, and it may take even longer as the Rural Utilities Service extended the deadline to 2015 for companies to submit their paperwork to get grants.
Even when companies have been approved for grants, some are rejecting them, sometimes because they're too restrictive, others because it was for projects out of its specialty. Windstream (NAS: WIN) , for example, acquired Norlight, which had proposed a stimulus-based wireless project in Illinois. But Windstream chose not to pursue it after the purchase because it prefers wired projects. The delays and extensions show the awards Calix was counting on to move it forward may be a long time in coming -- if ever -- because there's a move afoot in Congress to return all unspent stimulus funds.
CALX is simply worth more than $12 in a private M&A deal right now. Yes, telecom equipment companies have taken a beating. Yes, CALX is deeply cash flow negative at this time ([because of] the acquisition of Occam). Let's see what CEO Carl Russo can do to accelerate the merger of the two companies and generate some positive cash flow.
Add Calix to your watchlist, and let us know in the comments section below whether you think it will be able to get a strong signal for growth.
It's not the loan guarantee USEC was hoping for, but the Energy Department has agreed to some R&D funding for a uranium enrichment demonstration project. The loan guarantee is still pending, but DOE will provide USEC with up to $300 million for test manufacturing and operating production-design machines to see if they would actually operate at the scale necessary for full commercialization. Management says it "preserves a path" to salvage the American Centrifuge project, but it looks more like the trail has grown cold and it will be a long wandering in the wilderness.
The stock likely plummeted because it wasn't the loan-guarantee approval the market had been anticipating when it marched the stock higher earlier in the week.
Add USEC to the Fool's free portfolio tracker to keep abreast of developments and see if it will ever find its way through DOE's labyrinth, and see what others are saying on the USEC CAPS page.
At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned. Check out hisholdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of AT&T and Acme Packet. 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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