Noteworthy Trends Worth Monitoring

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

A noteworthy loss is one that forces investors to take notice, but is not necessarily the largest loss of a particular trading session. These are losses that might indicate a change in trend or might be caused by a catalyst that could lead to significant fundamental declines. As a result, I am looking at four such trends on Tuesday, trying to determine if more loss might be ahead.

<table> <tbody> <tr> <td> <p>Company</p> </td> <td> <p>Ticker</p> </td> <td> <p>Jan. 8 Performance</p> </td> </tr> <tr> <td> <p><strong>Boeing </strong></p> </td> <td> <p><strong><span class="ticker" data-id="202905">(NYSE: <a href="">BA</a>)</span></strong></p> </td> <td> <p>(2.63%)</p> </td> </tr> <tr> <td> <p><strong>Regeneron  Pharmaceuticals </strong></p> </td> <td> <p><strong><span class="ticker" data-id="205202">(NASDAQ: <a href="">REGN</a>)</span></strong></p> </td> <td> <p>(3.23%)</p> </td> </tr> <tr> <td> <p><strong>Nokia </strong></p> </td> <td> <p><strong><span class="ticker" data-id="204739">(NYSE: <a href="">NOK</a>)</span></strong></p> </td> <td> <p>(4.03%)</p> </td> </tr> <tr> <td> <p><strong>Alcatel-Lucent</strong></p> </td> <td> <p><strong><span class="ticker" data-id="209682">(NYSE: <a href="">ALU</a>)</span></strong></p> </td> <td> <p>(8.67%)</p> </td> </tr> </tbody> </table>
  • Over the last few sessions shares of Boeing have fallen by more than 5% due to well-reported problems with its 787 Dreamliner. The planes have seen fuel leaks, fires, and numerous electrical problems. Investors are now worried that these issues will have an impact on consumer confidence and that these setbacks could affect the company’s fundamentals. In some ways this situation reminds me of the Gulf oil spill with BP that crashed its stock, although the problem with Boeing is not as severe. BP ultimately recovered and I believe that Boeing will as well. The company is one of the most innovating companies in the world, and at this point, there is no reason to think these issues are long-lasting or unfixable.
  • Regeneron fell after reporting Q4 sales of its blockbuster drug Eylea. The company reported sales of $276 million, which was $12 million above expectations. Therefore, it’s really hard to say why the stock fell on Tuesday. Regeneron has rallied 170% over the last year and is trading with a price/sales of 15.44; as a result it’s possible that great results were already priced into the stock. Regeneron is part of the Orphan designation class of stocks that trade with large valuations. Therefore considering its fundamental growth, I don’t think this downtrend will last long.
  • Apparently, Nokia is not paying its taxes in India. The stock fell 4% after a report that Indian tax officials raided a plant over allegations that the company has avoided paying 30 billion rupees ($543 million) in taxes. Although this is serious, the bigger issue might be the trend of Nokia. The stock has rallied over the last few months and has crossed the $4 price level. However, the stock now sits at $4.00 and it will be interesting to see what happens if it falls below that level. Nokia’s rise has been due to speculation, therefore I am curious to see if these speculators are brave enough to hold this stock into earnings season.
  • After trading higher by 60% in the last month, shares of Alcatel-Lucent fell sharply lower due to selling pressure in the telecom equipment space. The performance was frustrating, however Alcatel has a history of large and sudden gains only to fall and trend considerably lower as all gains are lost. In my opinion, this time is different for Alcatel, and I think the company will slowly but surely start to improve due to its restructuring plan. The problem is that this plan will not create an instant success; it’s going to be a long process plagued with volatile days, weeks, and even months. However, with that being said, Alcatel is still cheap with a market cap of $3.6 billion and a price/sales of 0.19, making it a good long-term investment.

All of these companies posted losses that felt like significant changes in the trend of each stock. However, I am willing to bet that those with promise and strong fundamentals will continue to perform well.  Regeneron had great Q4 sales and Boeing is a massive company that will soon overcome its short-term concerns. Therefore, these losses may be meaningless, but are still worth monitoring nonetheless. 

BrianNichols is long ALU. The Motley Fool has no position in any of the stocks mentioned. 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!

blog comments powered by Disqus