2-Star Stocks Poised to Plunge: Avid Technology?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, audio- and video-editing technologist Avid Technology (NAS: AVID) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Avid's business and see what CAPS investors are saying about the stock right now.
|Headquarters (founded)||Burlington, Mass. (1987)|
|Market Cap||$463.0 million|
|Trailing-12-Month Revenue||$677.9 million|
|Management||Chairman/CEO Gary Greenfield|
CFO Kenneth Sexton
|Return on Equity (average, past 3 Years)||(9.6%)|
|Cash/Debt||$32.9 million / $0|
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 30% of the 125 members who have rated Avid believe the stock will underperform the S&P 500 going forward.
There's little or no sales growth ahead, and Avid has become a margin story from head to toe. And there's that Apple-made opportunity that seems to be slipping through management's fingers. Adobe, on the other hand, is accelerating.
I think investors will wake up from this euphoric jump to find that Avid's long-term prospects don't measure up. Cost-cutting is a delicate balancing act, and you can't really force customers to flock to your richer-margin products. Focusing on margin growth without destroying the underlying business is very, very hard. It's a risky turnaround plan.
What do you think about Avid, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
Want to see how well (or not so well) the stocks in this series are performing? Follow the newTrackPoisedToCAPS account.
At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Adobe and Apple. Motley Fool newsletter services have also recommended creating a diagonal call position in Adobe and a bull call spread position in Apple. 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 Fool's disclosure policy always gets a perfect score.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.