5 Superball Stocks Dropped Hard Last Week -- Which One Might Bounce Back?
When stocks fall fast and far, they sometimes set themselves up for remarkable rebounds. The five stocks listed below all suffered dramatic drops over the past week. With help from the 180,000 members of Motley Fool CAPS, we'll see whether any of them have the potential to bounce back.
Let's meet today's contenders:
How far from 52-week high?
(out of 5)
Advanced Micro Devices
Fuel Cell Energy
Five super falls -- one superball?
Last week was a perfectly miserable time to be a stock investor, with the S&P 500 losing more than 3% of its value through Friday. More than 5,400 separate companies exited the week lower than they went into it, and an astounding 884 separate stocks (including all five named above) lost at least 10% of their market capitalization -- literally decimated over the course of the week. So, what went wrong?
Beginning at the bottom, we find a pair of alt-energy stocks getting hit particularly hard, with Trina Solar down 13% in the past week, and Fuel Cell Energy off more than 15%. (And yes, they both slid a further 5% in Monday trading.) Neither company had any particularly "bad" news to report, however. To the contrary, on Tuesday, FuelCell Energy announced it had won a new contract to "evaluate" the potential of integrating its fuel cell power plants with natural gas power plants. And on Friday, Trina confirmed the sale of a 10.6 megawatt solar power plant to a private equity buyer.
Regardless, with no dollar values being attached to either of these announcements, it seems investors remain less than thrilled with the companies' prospects.
A bit higher up the list, we find semiconductor plays AMD and SanDisk struggling. Both companies were hurt by reports last week that Chinese demand for computer chips is weakening. AMD compounded its troubles by choosing last week to announce that its CEO is stepping down (to be replaced by its COO). As you might expect, investors on CAPS are punishing AMD with a worse rating (two CAPS stars) than SanDisk receives (three stars).
But fear not, intrepid investor. Last week's list of losers contained at least one stock that -- in the opinion of CAPS investors -- has a great chance to bounce right back. It's name...
Our top prospect for a superball-like bounce back this week, it seems, is Internet-banking star BofI (for "Bank of Internet") Holding. BofI is an official recommendation of Motley Fool Rule Breakers and by some accounts the "best in class" public thrift company in the United States.
BofI also wins high marks from CAPS members -- and in no small part because these are individual investors and consumers, just like you and me, and because they have first-hand knowledge of the bank and its quality. CAPS member My535, for example, characterizes BofI's business as providing "low cost yet excellent service banking. My experience with them caused me to switch from BofA."
Or take CAPS member john22563. In addition to owning BofI, John says he "also refinanced through them back in October. I got a great rate, the service was excellent, and overall very satisfied with [their] performance." John continued, "[B]ased on my research and experience with them, I expect this company to blow away the competition in the coming years."
And with all the enthusiasm surrounding the business, RugbyViking13 -- one of our CAPS "All-Star" investors -- predicts that BofI stock will soon "make a strong rebound."
Is RugbyViking13 right? Are all of these investors right to be so enthusiastic about BofI Holding? Well, let's see here.
BofI Holding, by the numbers
Priced at 17.3 times earnings, BofI Holding stock doesn't cost a whole lot more than the average "savings and loan" stock tracked by Yahoo! Finance (where P/Es average about 17.1). And yet, with a long-term growth rate pegged at 20%, BofI Holding is growing nearly eight percentage points faster than the average S&L stock -- and twice as fast as the S&P 500 at large. Incidentally, that 20% growth rate is also fast enough to give BofI Holding a most attractive PEG ratio of just 0.86 -- significantly cheaper than the 1.0 PEG ratio at which value investors begin to get interested.
The stock's return on assets and return on equity, at 1.5% and 17.5% respectively, are what banking analysts would call "solid" and significantly better than you'll find at one of the banking industry's giants, such as a Bank of America or JPMorgan Chase. Really, the only downside I see in BofI holding stock, from a valuation perspective, is that its price-to-book value ratio is a bit high for a bank, at 2.6 -- but given the company's rapid growth rate and strong profitability measures, I think it's worth it.
Long story short? Rated at five stars by CAPS investors, BofI Holding is a stock that hasn't performed well of late -- but if it keeps performing at the levels we've seen so far, it could well bounce back. It's an excellent candidate for this week's "superball stock."
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The article 5 Superball Stocks Dropped Hard Last Week -- Which One Might Bounce Back? originally appeared on Fool.com.Fool contributor Rich Smith does not own, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 296 out of more than 180,000 members.The Motley Fool recommends Bank of America and BofI Holding. The Motley Fool owns shares of Bank of America, BofI Holding, and JPMorgan Chase. 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.
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