Top Losers on Wednesday: Are Any Worth a "Buy"?

Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

On Wednesday we saw a market that traded higher but several big name stocks that lost great value. Some of which were deserving of this loss, but then there will be some that will trade higher and return large gains following this loss. With that being said, I am looking at five stocks with large loss on Wednesday; three to buy and two to sell.


<table> <tbody> <tr> <td> <p>Company</p> </td> <td> <p>Ticker</p> </td> <td> <p>Wednesday Return</p> </td> </tr> <tr> <td> <p><strong>Tibco Software</strong></p> </td> <td> <p><strong><span class="ticker" data-id="205734">(NASDAQ: <a href="">TIBX</a>)</span></strong></p> </td> <td> <p>(19.20%)</p> </td> </tr> <tr> <td> <p><strong>Pandora</strong></p> </td> <td> <p><strong><span class="ticker" data-id="225443">(NYSE: <a href="">P</a>)</span></strong></p> </td> <td> <p>(17.70%)</p> </td> </tr> <tr> <td> <p><strong>Freeport-McMoRan Copper</strong></p> </td> <td> <p><strong><span class="ticker" data-id="203558">(NYSE: <a href="">FCX</a>)</span></strong></p> </td> <td> <p>(15.90%)</p> </td> </tr> <tr> <td> <p><strong>Select Comfort</strong></p> </td> <td> <p><strong><span class="ticker" data-id="205385">(NASDAQ: <a href="">SCSS</a>)</span></strong></p> </td> <td> <p>(9.50%)</p> </td> </tr> <tr> <td> <p><strong>Apple </strong></p> </td> <td> <p><strong><span class="ticker" data-id="202686">(NASDAQ: <a href="">AAPL</a>)</span></strong></p> </td> <td> <p>(6.43%)</p> </td> </tr> </tbody> </table>
  • Tibco was punished throughout the trading day after lowering its Q4 guidance, citing conservative government spending. The company also noted hurricane Sandy related delays and poor execution as contributing factors.  As a result, analysts were busy downgrading the stock, and personally, I agree with them. Tibco is nothing I’d want to touch anytime soon.
  • Pandora announced what I consider to be a very strong quarter. The company beat expectations and saw strong numbers across the board. But, the company issued weak guidance and blamed uncertainty regarding the fiscal cliff, saying that advertisers were softening spending. As an investor I really like this move on behalf of management. The company’s preparing investors for a worst case scenario. As a result, investors might be pleasantly surprised if politicians get their act together and solve the problem.
  • Freeport-McMoRan fell after the company re-entered the energy production business with the acquisition of two companies. Investors and analysts have said the company has “broken shareholder trust” and that nothing justifies this action. Obviously, people are upset, and believe it is a sign of desperation, or that the company is abandoning its business plan. Due to the uncertainty, I don’t see a safe investment in this stock.
  • Select Comfort lost 10% of its valuation, and did not announce poor earnings, lower guidance, or announce anything discouraging. Instead, the stock was pushed lower due to lower guidance from Mattress Firm Holding Corp. This reaction reminds me a lot of when Tempur-Pedic cut its guidance in half back in Q2 of this year. Back then, Select Comfort traded lower but then recovered with large gains. Select Comfort continues to prove quarter-after-quarter that it’s a great company in a volatile and struggling industry. Therefore, I am buying at these levels. The stock might sink a little lower in the coming weeks, but I feel fairly confident that it will see a similar effect as back in July, when it rose more than 60%.
  • In just one day, the world’s largest company, Apple, saw a Morgan Stanley or a company the size of Walgreens wiped from its market capitalization. The near $35 billion that was eliminated from its market cap represented the largest one-day loss of 2012, and it was caused by the “fear” of iPhone component orders and the potential requirement of higher margins. Analysts fear that the company is losing market share to its competitors, and it seems like everyday there is a report that brings about new fear. However, the bottom line is that this is a company with expected growth greater than 20% and a forward P/E ratio of just 9.30. In my opinion, it is presenting deep value, and its fall has been a domino effect of hedge funds trying to close positions prior to the end of the year, to protect gains and reflect well on yearly statements. I think the remainder of this year will stay challenging for Apple but once 2013 begins and earnings approach funds will begin to buy back in, and the stock will rise. At that point concerns will be minimized, as a higher stock price always brings about brighter outlooks.

Of the four companies above I believe there are some good opportunities. Tibco continues to look like a train wreck, and if its struggles are as bad as it sounds then I think it has more room to fall. Freeport pays a great dividend and might very well trade to new highs and return large gains. However, without a clear direction it is usually best to be patient, as these acquisitions usually have a drastic effect, one way or the other.

Then, there are the stocks I think are presenting clear value: Pandora, Apple, and Select Comfort. All are trading cheap compared to their respective industries, and I believe the loss was an overreaction. Like I said, we might see some short-term loss, volatility, or weeks of no return, but eventually these three stocks could be very rewarding as an addition to your portfolio. 

BrianNichols owns shares of Apple. The Motley Fool owns shares of Apple and Freeport-McMoRan Copper & Gold. Motley Fool newsletter services recommend Apple and Tibco Software. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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