2 Stocks Seeing Red

Only those wanting to believe in the fairy tales coming out of Washington would have believed the employment picture was improving. But the massive numbers of people simply having given up on looking for work is what is driving the unemployment rate down. The real reason the Dow Jones Industrial Average tumbled 168 points, or 1.3%, on Friday, was the labor force participation rate -- the number of people actually still working -- dipped to 64.8%, the lowest level since 1981.

But some companies fell even harder than the markets, so first let's see whether they had good reason to drop. Sometimes, panic-fueled declines can make excellent buying opportunities.

A disconnect on growth
Making something that's so popular could end up biting you if you can't fill the demand. That seems to be at play with Qualcomm (NAS: QCOM) , whose Snapdragon chipset is in such high demand that there's now a short of it and consumer-electronics makers like Asus are having to delay their own product unveilings because of it. If the problem becomes so acute, you may just see manufacturers turn to other suppliers for what they need.

Whatever the cause -- and some say Samsung is behind it, having bought up all the chips for its new Galaxy smartphone -- the problems are rippling out through the industry. "Motion processing" chipmaker InvenSense (NAS: INVN) got whacked on Friday because it reduced the high end of its guidance since some of its handset customers were experiencing component shortages. That was also laid at Qualcomm's doorstep, as it was having yield issues with 28-nanometer capacity shortages.

But I'd view the slapdown Invense got as a buying opportunity. Taiwan Semiconductor Manufacturing says the worst of the capacity shortage is behind it so that Qualcomm and NVIDIA (NAS: NVDA) , another chipmaker feeling the shortage pinch, shouldn't have any real problems going forward, but that hasn't stopped them from allegedly seeking out other manufacturers to fill the void.

That should mean supply lines will open soon enough and product will start flowing again. I've already rated InvenSense to outperform the market indexes on CAPS because not only are gyroscopic, sensor, and other technologies integrated into the Apple (NAS: AAPL) iPad and iPhone, but its technologies also embedded in phones from HTC, LG, and Motorola, and they're included in Google's Ice Cream Sandwich Android design as well.

Add InvenSense to your Watchlist, and then tell us on the InvenSense CAPS page whether you think it will recover as the year progresses or whether will investors hang up on the stock altogether.

2b or not 2bebe
Retail's party girl, bebe stores (NAS: BEBE) , is caught up in a numbers game, as catering to the 21- to 34-year-old fashionable party set has the retailer feeling like Lindsay Lohan after a long weekend of clubbing. But it's not all about the quarterly earnings, either, which it expects to be somewhat dismal regardless. Same-store-sales growth is expected to slow, and margins are predicted to fall.

bebe narrowed its losses from the year-ago period, and revenues rose 10.5% in the fourth quarter, yet its walk of shame was oh-so-predictable, and in fact I did that three years ago, when I said it was on a path to drag its name through the mud.

The fashion retailer lost its fashion sense and instead embarked on a campaign to appear hip. Out went its bebe sport stores and in came PH8, a nearly unpronounceable amalgam of "fate" and the streetwise "phat." Also on board was a low-cost concept store called 2b, and that upright model of respectability, Kim Kardashian, was brought in to hype its lines. PH8 was a dismal failure and closed in 2010, and Kim was quickly tossed out on her prodigious backside, yet 2b lingers on (and the Kardashians linger on as well, both on TV and now at Sears Holdings).

But bebe is still grasping at how best to run its business with the latest idea being to bring its online store in-house. In fact, that was the reason behind the disappointing results bebe had in the quarter, though management believes the long-term benefits outweigh the near-term costs.

With one in five CAPS members rating the fashion retailer to underperform the market, it's clear that like some certain starlets they don't believe the company has learned its lesson. But tell me in the comments section below or on the bebe stores CAPS page whether you think it can make it to recovery, and then add the stock to the Fool's free portfolio tracker to see whether it can regain its fashion sense.

Ready for a resurrection
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At the time thisarticle was published Fool contributorRich Dupreyholds no position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Google, Qualcomm, and InvenSense.Motley Fool newsletter serviceshave recommended buying shares of Google and NVIDIA and writing puts on NVIDIA. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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