The Week That Was: Home Depot, Groupon, Best Buy and Nokia
Tim is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
For many last week will always be about the much anticipated Facebook (NASDAQ: FB) IPO. And why not? If nothing else there was enough fanfare, speculation and opinions to last a lifetime. The consensus seems to be Facebook’s foray into the world of public ownership was a disappointment – though when it’s all said and done the only thing disappointing was the impact the IPO had on other companies with even the slightest affiliation.
What some investors seem to have either forgotten or simply ignored was the multiple increases in the IPO pricing Facebook endured prior to opening for business. Yeah underwriters had to prop the shares up toward the end of the trading session to avoid closing below $38, but even that was well above the initial target in the $30 range Facebook management had discussed early on. Of course either one values the company well beyond any semblance of reality, but we all knew that was coming.
Wrong place, wrong time. After wowing shareholders with the news of a fantastic first quarter, Groupon (NASDAQ: GRPN) was beaten down soundly by ancillary Facebook haters at the end of last week. After such a nice run-up immediately after the announcement of Q1 numbers – surprising growth in the North American market and continued international upside were particularly positive – Groupon shareholders felt the wrath of Facebook’s “disappointing” showing. For investors who were a little late to the Groupon party, last week’s sell-off is a godsend.
As discussed last week, prior to the decline Groupon was already a sound investment opportunity. In fact most analysts ratcheted up their target prices to the $17 to $20 range – back to their own IPO territory. At under $12 a share that’s a lot of upside, even if guesstimates turn out to be overly optimistic. If you’re already an owner it’s a good time to up your position. If not, thank Facebook for underwhelming investors last week and jump – Groupon’s for real.
Best Buy, The Home Depot, and Retail in General
For investors intrigued by the retail industry – and there’s a lot to be intrigued with – last week was borderline schizophrenic. On the one hand Home Depot (NYSE: HD) pleasantly surprised with solid Q1 sales and revenue results. Actually “solid” doesn’t do the company justice – a 27% jump in earnings coupled with management upwardly revising annual expectations should have been enough to send the stock soaring. Unfortunately Home Depot announced earnings on the same day the April retail industry report proceeded to contradict company results. Saks (NYSE: SKS) was another retail sector stalwart caught in the crossfire of conflicting information. Too bad for both Home Depot and Saks – but good news for investors. Both remain sound investment options and good bets to take advantage of strong consumer spending and confidence data going forward.
Last week was a tough one for Nokia (NYSE: NOK) management and shareholders. Down nearly 10% from what were already depressed levels – analyst negativity was the primary culprit. When a key Nokia pundit suggested the company would face downward pressure in the near term – and even went so far as to suggest there were concerns about Nokia as a viable entity moving forward – the results were predictable. But here’s the thing – nothing’s really changed for Nokia investors. The bet remains the same – believing in CEO Stephen Elop’s focus on driving Nokia in a new direction and giving him and the management team the space to implement the strategy.
You don’t turn an ocean liner on a dime – it takes time. Nokia pessimists will immediately think Titanic, but so what? Several new strategic alliances with the likes of Rovio and their Angry Birds application – along with Groupon, ESPN and others – are positive steps to address the need for the company’s Lumia 900 smartphone to expand their app download options. Pending new product releases utilizing Microsoft’s new and improved operating systems also bode well in the mid-term. Nokia remains an option for those with time, a strong constitution and a willingness to bet on Elop and the crew.
timbrugger has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Nokia and The Home Depot. 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.If you have questions about this post or the Fool’s blog network, click here for information.