1 Stock That Broke Out and 2 That Broke Down
The S&P 500 and the narrower, price-weighted Dow Jones Industrial Average lost 1.1% and 1.2% this week, respectively, breaking a three-week winning streak. Investors are justifiably concerned about tomorrow's deadline for lawmakers to keep the government running -- and, beyond that, the looming debt ceiling. However, the macro picture doesn't explain everything; for the following three stocks, price action last week was very much driven by company-specific news:
Apple's stock surpassed its 50-day moving average on Monday, as the company announced record-breaking sales numbers for the launch weekend of its iPhone 5c and 5s models. The 9 million units sold far exceeded the 5 million achieved by the iPhone 5, thanks in part to a simultaneous launch in China and the addition of new operator in Japan. (For reference, 2 million units of the iPhone 5 went on the first day it became available in China, according to the Financial Times.)
Apple also said 200 million devices are already running iOS 7 -- a faster adoption rate than its predecessor -- and indicated that fourth-quarter revenues and gross margin would come in at the high end of the ranges that management had previously provided. On the week, the stock rose 3.3%; I think there's a good chance legendary investor Carl Icahn may end up being proved right with regard to this statement, earlier this month, that Apple shares are "extremely cheap."
BlackBerry's stock broke below its 50-day moving average on Tuesday, and it closed below the indicator on Friday. The stock was actually up on Monday on news that a consortium led by 10% shareholder Fairfax Financial has signed a letter of intent to acquire the company for $9 per share. However, as investor skepticism regarding the odds of the completion of any deal increased, the shares drifted lower during the week, for an 8% loss. I think this skepticism is well justified and would suggest investors avoid BlackBerry shares.
Shares of troubled retailer J.C. Penney shed a blood-curdling 31% of their value this week. That loss was precipitated by two events: First, on Wednesday, a Goldman Sachs fixed income raised concerns about the company's liquidity just ahead of the critical holiday shopping season. Late Thursday, the company responded by announcing a highly dilutive stock offering to raise up to $932 million. (No points for guessing who arranged the debt offering, but the name rhymes with "golden slacks.") The offering may be wise from the company's standpoint, as the cash cushion buys it some breathing space, but it was extremely costly to existing shareholders, who learned the number of shares outstanding would be increasing by up to 44% -- it's little wonder the stock fell 13% on Friday. As with BlackBerry, I think J.C. Penney is entirely speculative at this stage and is, therefore, unfit for investors' money.
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The article 1 Stock That Broke Out and 2 That Broke Down originally appeared on Fool.com.Fool contributor Alex Dumortier, CFA, has no position in any stocks mentioned; you can follow him on Twitter @longrunreturns. The Motley Fool recommends and owns shares of 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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