Why Did My Stock Just Die?
Well, the president's jobs speech failed to inspire economic confidence and the markets plunged, but your stock went and took 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)
|Advanced Analogic Technologies (NAS: AATI)|
|VeriSign (NAS: VRSN)|
|MGIC Investment (NYS: MTG)|
With the Dow Jones Industrial Average (INDEX: ^DJI) falling 303 points on Friday, or 2.7%, stocks that went down even more are pretty big deals.
Weddings are supposed to be happy times, but the lead-up to the big day can cause a lot of stress. It seems Advanced Analogic Technologies is causing a bit of pre-marriage jitters in its paramour Skyworks Solutions (NAS: SWKS) .
Like chip-making peer Cirrus Logic (NAS: CRUS) , Skyworks has ridden Apple's gravy train of better iPhone sales, providing the smartphone with power amplifiers for its 3G signals. It believes Advanced Analogic will give it entry into the power-management business that's exploding with demand for smartphones.
But in a filing on Friday, Skyworks hinted that its relationship with AAT was anything but placid. It requested certain information and data from AAT, which it had not provided, and it still wanted to meet with the company's co-founder. It reminded AAT that a breach would allow it to back out of the deal. Fear that it'd call off the wedding was behind Friday's plunge. Yet AAT says it's given Skyworks what it wanted, and if something was missing, Skyworks never said what it was. And the company's founder said he's willing to get together this week.
So is this a case of having Skyworks getting cold feet and looking for a way to back out of the deal, or it is just a misunderstanding? Obviously, the markets went with the former view, but if AAT has met Skyworks' demands, the stock could quickly rebound.
CAPS All-Star TSIF goes on the premise that the likelihood that the deal will go through tilts in its favor, but even if the nuptials are cancelled, "AATI as a standalone was showing slow, but real potential despite negative earnings the last four quarters (plus)."
Add Advanced Analogic Technologies to the Fools' My Watchlist feature to keep track of whether it gets hitched or not.
The devil's in the details
Well, at least he wasn't fired over the phone like Yahoo!'s chief, but the drama VeriSign added to the resignation of its CFO -- canceling a couple of conference presentations -- unnecessarily fueled takeover speculation. When the markets realized there was no deal in the offing but rather that the executive suite's revolving door was still spinning, investors sent the shares lower.
The domain-registration business also hasn't endeared itself to analysts who wonder where the business is going, let alone how it's going to get there. Having sold off everything but its Internet naming business, what are the growth levers it can pull?
I noted yesterday that it is still signing up millions of new domain names, 5 million new ones in the second quarter alone. It's a much simpler business now, and while temporarily rudderless, some analysts still view the stock as a good bet. So do the 86% of CAPS members rating the Internet infrastructure provider who believe it will outperform the market. You can add your opinion on the VeriSign CAPS page.
Was it the lack of any specific proposal to boost housing in the president's speech the other night that sent mortgage insurers MGIC Investment and Radian Group (NYS: RDN) lower by double-digit percentages, or that he only obliquely suggested yet another effort was needed to stave off foreclosures?
Since the previous five plans to boost housing haven't worked, there remains a huge overhang of inventory depressing the market. Every time Zillow sends me a monthly update on the estimated value of my home, I'm made painfully aware of how far this crisis still has to go.
However, with MGIC rival PMI Group out of the mix, there will be more business for MGIC and Radian to write. Of course, that market is nowhere near the level it once was, but the situation hasn't changed since the other day, when investors sent MGIC's shares soaring 25%. These manic mood swings may create opportunities, but I think it's still far too volatile and the niche too risky to wade into.
While the CAPS community leans in favor of the possibility that it will eke out a win over the broad indexes, more than half of the All-Stars rating MGIC believe it will fail. Either way, the low two-star rating they've assigned the mortgage insurer suggests that they all think there are better places for your money.
Let us know in the comments section below or on the MGIC Investment CAPS page whether you think it can ensure a positive outcome.
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 Fool contributor Rich Duprey holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple, Cirrus Logic, and Yahoo! Motley Fool newsletter services have recommended buying shares of Yahoo! and Apple and creating a bull call spread position in Apple. 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. The Motley Fool has a disclosure policy.
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