Aside From Apple: 3 Stocks That Have Nosedived From Their 52-Week Highs (Part II)

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

This is Part II of a two-part article. Click here to the first part.

The past two months have been an exciting time for financial newscasters and pundits. The sensational news is that Apple’s stock – seen by many as infallible – has had a great fall. After hitting $700 in September, with so much enthusiasm and eagerness to see $800 or $1000 right around the corner, Apple investors have been stunned by a 20% drop in the value of their shares. As some comfort to those shareholders, I’d like to remind the world that Apple (NASDAQ: AAPL) isn’t the only company this year to have had a great fall from the top.

Sandals and Scandals

<img src="http://media.ycharts.com/charts/8fe304eca837c9735fb77b0e7bf7910c.png" />

BIG data by YCharts

Big Lots (NYSE: BIG) seemed to be moving along just fine for years, charting some respectable gains in stock price from 2011 to 2012. When did Big Lots fall off a cliff? The stock reached a high of around $46 in April – the peak of the mountain. After reaching that point, shares plummeted 24%, which didn’t take the stock to the base of the mountain; another 20% plunge was only four months away. The stock has fallen further since then.

What happened?

The first major tumble from the stock’s 52-week high occurred on April 23. It was triggered by a press release from Big Lots, stating that the March 2012 estimate of a 2%-4% sales increase was incorrect. Instead, the company said comparable store sales would be negative compared to prior guidance, and that the electronics and consumables businesses were performing below expectations.

Investors didn’t appreciate the news. The stock fell off the first cliff, climbed 10% over the next three months, and plunged another 20% off the second cliff. This time, it was because the company cut its expectations for 2012 earnings per share from $3.35-3.40 to $2.80-2.95. Big Lots posted earnings per share of $0.36, which was five cents lower than expected.

The fun continues with Big Lots. The company’s CEO, Steven Fishman, is currently under investigation by the SEC because of alleged trades he made right before the stock’s first cliff-dive in April. Allegedly, he sold $10 million of stock right before the release of negative guidance, avoiding $2.4 million in losses, according to the Wall Street Journal.

A Sleepy Mattress-maker

<img src="http://media.ycharts.com/charts/00266ae97d0d76213d9e060ed7b37dc6.png" />

TPX data by YCharts

Shares of Tempur-Pedic (NYSE: TPX) hit an all-time high in April 2012. If you bought the stock at that time, your shares are currently worth 60% less than what you paid. The lead-up to the all-time high was tremendous, experiencing a 40% gain between November 2011 and April 2012, and experiencing a 200% gain between September 2010 and April 2012. The shares have come back down to Earth, now trading at the same levels they were priced in September 2010.

What Happened?

While Big Lots had two sharp falls in stock price this year, the mattress giant experienced three – the first in April, the second in June, the third in October. The first was prompted when Tempur-Pedic reported Q1 results that revealed reduced sales and earnings per share guidance for full-year 2012. The company followed up in June by cutting its outlook for EPS by almost 29%, and lowered estimated of full-year revenue by more than 10%. And in October the trend continued with Tempur-Pedic lowering revenue projections and EPS forecasts.

These surprises prompted a national securities law firm to investigate the company for potential securities fraud. The firm, Faruqi & Faruqi, LLP, was exploring the possibility that Tempur-Pedic had failed to disclose its deteriorating competitive position in a timely manner, and had misled investors by releasing positive statements concerning the company’s outlook.

It’s been a less-than-fantastic year to be a Tempur-Pedic shareholder.

The Bottom Line

Although Tempur-Pedic and Big Lots seem to be nowhere near a recovery, keep in mind that a stock can tumble 20% in a day only to regain its footing in a week – and perhaps thrive in the following years. A sudden drop in value of your stock isn’t a sure indication that anything is fundamentally wrong with the company you own. The market can be skittish. You should keep your composure. Avoid panicking, take the time to review the fundamentals of the company, and always make a non-emotional decision whether to buy or sell.


robbyinvest has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Big Lots, and Tempur-Pedic International. Motley Fool newsletter services recommend Apple. 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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