4 Dogs of 2011 That Will Bounce Back in 2012
Some companies are glad to see 2011 fading away in the rearview mirror.
Bad management decisions, overturned bandwagon plays, and investor apathy resulted in hefty share price declines last year.
Things may appear bleak, but attractive valuations and potential catalysts in 2012 will make the year ahead easier for shareholders. I took a look at a few companies that stumbled in 2011 -- but that you will ultimately forgive in 2012 -- a few weeks ago.
Let's take a closer look at some of the other 2011 losers that are positioned to come back strong this shiny new year.
Travelzoo (NAS: TZOO)
Hopping on the daily-deals bandwagon resulted in torrid gains in the latter half of 2010 for Travelzoo, but 2011 was a different story. Shares of the travel-deals publisher fell 41% last year, even though the company managed to blow past Wall Street's profit targets in three of the past four quarters.
The good thing about Travelzoo's cascading share price at a time when earnings growth has been explosive is that the dot-com travel specialist hasn't been this cheap in ages. The stock is fetching less than 15 times this new year's projected profitability.
There will be challenges. Travelzoo will have to prove that it can continue to grow its list of willing recipients hungry for its weekly Travelzoo Top 20 deals of marked-down getaway experiences. However, now that this model is truly scalable given the profitability of its European operations, the best is yet to come.
Sohu.com (NAS: SOHU)
Being a master of all dot-com trades served Sohu well when everybody wanted in on China's miraculous growth story. Seeing Sohu's stock shed 21% of its value last year when the market got spooked by China's restrictive ways and slowing economic growth was sobering.
However, just as Travelzoo's descent was marked by a sharp ascent of its fundamentals, Sohu continues to move higher. Analysts are predicting that revenue and earnings climbed 38% and 27%, respectively, by the time Sohu posts its final 2011 tally. They see Sohu's growth decelerating to an 18% spurt in net income on a 26% uptick in revenue, but who wouldn't want to pay nine times forward earnings for a company that's a key Chinese player in online gaming, Internet portals, and search?
Limelight Networks (NAS: LLNW)
Content-delivery networks were a bad place to be in 2011, but the prospects have improved dramatically with niche leader Akamai (NAS: AKAM) announcing plans to acquire feisty discounter Cotendo last month.
Limelight isn't profitable, but pricing pressures should ease with Akamai's move.
This is still Akamai's world that Limelight and its smaller peers are toiling away in, but after seeing its stock shed nearly half of its value -- along with Akamai's own 31% slide -- this is an important cyberspace backbone that is destined to return to favor in 2012.
Jamba (NAS: JMBA)
The parent company of Jamba Juice comes through with back-to-back quarters of profitability for the first time since going public in 2005 -- and the stock suffers a 42% haircut for all of 2011? Smoothie blenders can be so mean sometimes.
Jamba's efforts to hand off company-owned stores to eager franchisees is paying off on the bottom line, though now we head into the seasonally chilly quarters where cool smoothies aren't brisk sellers. However, analysts still see Jamba posting an annual profit for all of 2012.
It's a start.
12 months to prove me wrong
These four stocks were tossed aside by investors last year, suffering declines between 21% and 49%. If I'm calling for them to bounce back this year, in spirit of our CAPScall initiative for accountability, I'm initiating a bullish call on all four of these stocks in Motley Fool CAPS.
It's time to start thinking about what 2012 will bring, and what it means for your portfolio. You do want to beat the market this year, right? While we're at it, have you already checked out Motley Fool's top stock for 2012? The report is free -- like this article -- but it won't be around forever, so check it out now.
At the time this article was published Motley Fool newsletter services have recommended buying shares of Sohu.com and Travelzoo. 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.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Travelzoo and Jamba. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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