Why Did My Stock Just Die?
Here we go again. After several days of better than 100-point gains, the markets are swooning once more, but maybe your stock is taking an even bigger nosedive. Don't panic, though. 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)
|A.C. Moore (NAS: ACMR)||*||(17.5%)|
|Acme Packet (NAS: APKT)||***||(17.4%)|
|Flotek Industries (NYS: FTK)||***||(15.7%)|
The market plunged points 420 yesterday, or 3.7%, and stocks that went down by even larger percentages are pretty big deals.
The devil's in the details
There was no specific news to account for A.C. Moore's plunge yesterday, but its earnings report earlier this month suggested that withstanding another recession would be far more difficult to achieve. While the losses it recorded were narrower than in the year-ago period, analysts had been expecting it to craft a better result, but its efforts were hampered by falling sales.
The arts-and-crafts chain is displaying a bunker mentality, and considering its financial condition that's not a bad move. It operates 135 stores and didn't open any this quarter. It also doesn't plan on opening any next quarter, though it will be closing one.
While its main rivals, Michael's and Jo-Ann Stores, have both gone private, A.C. Moore also has to contend with Wal-Mart, Target, and other mass merchandisers. Yet all of its competitors, including another privately held chain, Hobby Lobby, are much bigger based on the number of stores they operate. Presumably the broader footprint can help ease any local upheavals, though simply being bigger doesn't guarantee success.
Fewer than 60% of the CAPS members rating the company think it will succeed in outperforming the broad market averages. You can tell us on the A.C. Moore CAPS page whether you agree that it's being held together by little more than baling wire and duct tape.
Wait a cotton-pickin' minute
Let's just blame NetApp and be done with it. The storage specialist reported that sales in July grew at half the rate they did in May, and management couldn't tell whether it's going to have to revise guidance for the year. The depressing vision sent the whole enterprise-level storage and cloud-computing niche spiraling down.
F5 Networks (NAS: FFIV) , Aruba Networks (NAS: ARUN) , and Acme Packet were among those that felt the market's wrath. Cisco (NAS: CSCO) was seen as a weak link that would allow these and other rivals to encroach on its network fiefdom and steal share, but weakness in IT spending may give it enough breathing room to recover any lost ground.
Cotton prices have since stepped back from their highs, but the Chinese government announced earlier this year that it was establishing a cotton reserve system and would pay farmers a premium to grow the crop. China's cotton acreage is estimated to grow just 5% this year, half the rate the government had predicted.
Acme Packet, along with others in the space, were downgraded yesterday by analysts who fear that the spending chill will impair their ability to grow. CAPS member Clint35, however, would beg to differ.
Down 17.38% in one day! Cool now it's a bargain. Well, not exactly. But they do have tons of growth ahead of them. And what they do is very important to other businesses.
You can follow its progress by adding it to the Fool's free portfolio tracker and network with other investors by adding your opinion to the Acme Packet CAPS page.
Going with the flow
Economic fears gripped shares of Flotek Industries yesterday, too, since lower demand would follow the nationwide slip into another recession (have we ever left it?) or into a depression. It's an industrywide concern, as Halliburton (NYS: HAL) slipped 10% yesterday and Baker Hughes was down almost 9%.
Yet the oil-services firm and "fracking" specialist is on the road to greater growth and is looking to expand in new markets, including Russia. Revenues in the second quarter surged 79% higher, generating a $2.1 million profit, a nice recovery from the $7.4 million loss it recorded last year. A better pricing environment, higher drilling activity, and a recovery in demand for specialty oilfield products led Flotek's strong results and bigger market-share gains.
With 95% of the CAPS members who've rated Flotek saying it will outperform the market, they're not too worried about any immediate economic crumbling or about the anti-fracking debate in Washington. Tell us on the Flotek Industries CAPS page whether you think it can drill down for further gains.
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. You can decide for yourself whether it's ready to come back from the dead.
At the time this article was published The Motley Fool owns shares of Wal-Mart and Cisco and has created a bull call spread position on Cisco. Motley Fool newsletter services have recommended buying shares of Cisco and Wal-Mart and creating a diagonal call position in Wal-Mart. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Rich Duprey has no financial position in any of the stocks mentioned in the article. You can see his holdings. The Motley Fool has a disclosure policy.
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