The Market Just Crushed My Stock!
Markets are more volatile than ever. So even if 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)
Diamond Foods (NAS: DMND)
National Bank of Greece (NYS: NBG)
AMR (NYS: AMR)
Source: Motley Fool CAPS.
The Dow tumbled 163 points yesterday, or 1.3%, so stocks that went down by even larger percentages are pretty big deals.
This won't make you hungry
After snack maker Diamond Foods rocketed higher on Friday after an analyst said he expected the probe over payments to walnut growers to conclude quickly without a finding of impropriety, I doubted it was so clear-cut, and the deal to acquire Pringles from Procter & Gamble (NYS: PG) was still not assured.
The company has said the payments were advances for this year's crop, while some walnut growers said they were told it was for last year's crop. If it was the latter, then it suggested Diamond was trying to artificially boost its prior-year profits. The accountant that the analyst hired to look into the payments now admits he may not have chosen his words carefully enough, as Diamond reported the investigation won't be completed until February. It also missed the SEC filing deadline for its quarterly report.
Fortunately, P&G isn't worried, saying internal probes like this take time. Its investors might not be so sanguine; as they'll be forced to accept some Diamond Foods shares if the deal goes through.
With a little more than three quarters of the CAPS All-Stars rating Diamond to outperform the market indexes, it suggests there's a bit of consternation among the investor community. If you disagree with this thinking, tell us in the comments section below or on the Diamond Foods CAPS page and then add the snack maker to your watchlist to see how the probe and subsequent Pringles deal turns out.
As I see it, the fatuous jumps in the market we've seen after every hopeful pronouncement out of the European Union are little more than diversions from what could become complete economic disintegration for the continent. As French president Nicolas Sarkozy remarked, there are "two Europes" now, as Great Britain has refused to give over more autonomy to the continental union.
That won't stop the rest of Europe from trying to regulate British financial interests, though, with the European Commission's economic and monetary VP promising to impose bruising regulatory restraints for the snub. Perhaps he's thinking of the out-of-control debt spiral Greece is caught in that's causing National Bank of Greece to swirl down the drain. It just reported losing 7 million euros over the first nine months of the year, not even accounting for the government bond bailout, where it could take as much as a 50% hit on Greek debt holdings.
The uncertainty hanging over the financial sector drew down the CAPS Money Center Banks sector by more than 5%. While National Bank of Greece led the way down, Citigroup (NYS: C) was off 5% and Lloyds Banking Group down almost 7%.
Although the CAPS community still assigns a three-star rating to the Greek bank, sentiment is turning against it with CAPS member sikiliza as just one who doesn't see it out of the woods yet. But you can tell us in the comments section below if you agree, and then follow along by adding it to the Fool's portfolio tracker.
Not flying high
I've almost started feeling sorry for AMR after watching actor Alec Baldwin rant against American Airlines for removing him from a flight because he refused to cooperate and turn off his cell phone like us mere mortals are required to do. While I see Baldwin's bloviating as just another example of an entertainment elite that believes it doesn't have to follow the rules and laws that apply to everyone, AMR brought about its own financial predicament.
With Delta Air Lines (NYS: DAL) and United Continental (NYS: UAL) having chosen to go the bankruptcy route before, cleaning their slate of legacy costs in the process, they've become profitable. American's parent certainly can't claim that. Now, as CAPS All-Star Schmacko points out, AMR's on the verge of oblivion:
Should have done this yesterday or the day before when AMR spiked back over a dollar. They've said they don't have enough money to cover their unsecured debt, which should mean common shares are worthless.
While 59% of the broader community thinks AMR can eke out a win yet, just 40% of the top-rated All-Stars agree. Add the airline to your watchlist and tell us on the AMR CAPS page if it's a stock worthy of support.
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. With CAPS, you can decide for yourself whether your stock ready to come back from the dead.
At the time this article was published Fool contributor Rich Duprey owns shares of Lloyds Banking Group, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Citigroup. Motley Fool newsletter services have recommended buying shares of Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.