Why Did My Stock Just Die?

Your stock just took a nosedive -- but don't panic. First, let's see whether it had good reason to fall. Sometimes, panic-fueled drops can make excellent buying opportunities. Here's the latest crop of cratered stocks that could provide a possibility for profit:

Stock

CAPS Rating
(out of 5)

Yesterday's Change

YRC Worldwide (Nasdaq: YRCW  )

**

(28.29%)

China Integrated Energy (Nasdaq: CBEH  )

**

(15.97%)

Pacific Sunwear (Nasdaq: PSUN  )

**

(13.92%)

With the S&P falling 25 points, or 2%, yesterday, the market measure is now in the red for the year. The prior day's intraday recovery turned into a rout as Japan's nuclear catastrophe continues to worsen. Despite the drop, stocks that went down by even larger percentages are still worth looking at.

Keep on truckin' ... or not
Trucking giant YRC Worldwide jackknifed on the publication of its 10-K annual report, which indicated that it missed the deadline to get approval for its restructuring from certain pension funds. Missing that milestone means that lenders could declare the company in default and force a bankruptcy filing. While YRC says the lenders haven't declared a default and it doesn't think they will, it's a very real and present danger to shareholders.

The sticking point may be the Teamsters union, which is seeking higher interest rates on their deferred pension obligations. Over the past few years as YRC has tried to stave off bankruptcy, the union has offered concessions on wages and benefits. In fact, one of YRC's trucking rivals, ABF, tried to block the labor agreement restructuring, saying it gave the trucker an unfair cost advantage. Now it appears the Teamsters are digging in their heels for more money on the missed pension payments.

While privately held ABF would likely be a winner in the event YRC declares bankruptcy, Con-Way (NYSE: CNW  ) and FedEx (NYSE: FDX  ) could come out ahead too. For quite a while now, trucking companies around the country have had to contend not only with a recessionary pricing environment but YRC's price cutting efforts too.

Highly rated CAPS All-Star tenmiles doesn't see the trucker pulling out of this skid, though 80% of the members rating YRC believe it can gain traction once again. Let us know on the YRC Worldwide CAPS page if it can keep on truckin'.

More questions in China
Given that China Integrated Energy beat analyst expectations on revenues and profits and issued guidance ahead of Wall Street's forecasts last week, you might wonder why its stock would plummet so yesterday. Once again, we have another Chinese small cap stock being accused of accounting fraud. And coming as it does on the heels of the latest in the ongoing China MediaExpress (Nasdaq: CCME  ) saga, the market sold off shares of the energy company.

The short seller that published the report said it had "irrefutable evidence" alleging that the company has misappropriated corporate funds and fabricated financial statements. Gee, haven't we've read all this before when it comes to these reverse merger stocks?

The one Wall Street analyst following China Integrated Energy on CAPS had been bullish on its prospects, and while many CAPS All-Stars were giving it the benefit of the doubt, a large contingent, or more than 30% of them, felt it couldn't beat the broad market indexes.

So is this just another example of a Chinese small cap fraud, or are short sellers merely trying to talk their book and make a profit during a period of uncertainty? Let us know in the comments section below or on the China Integrated Energy CAPS page.

The sun's not shining
Once upon a time, I thought surf-and-skate retailer Pacific Sunwear had a chance to catch a wave and soar higher. Those dreams were wiped out sometime ago, and it seems it continues to dash the hopes of investors on the rocky shores of falling revenues and continued losses.

As many companies have done, PacSun has been pushing its own private label denim, Bullhead, where it can earn better margins, but analysts contend that has ruined its credibility with the surfer dudes and chicks that would be its target market. That's an all-too-familiar refrain critics have leveled against the retailer. A few years back, it tried to bust a move in the "urban wear" market, but how a surf shop thought it would have any street cred in a hip-hop world defies understanding.

Analysts say rival Zumiez (Nasdaq: ZUMZ  ) has a more authentic feel for the skate crowd and is a better investing bet. Whether it's Zumiez, Volcom, or some other similarly inspired outfit, CAPS member GreenCollegeGrad says PacSun is dead in the water.

If you think the teen retailer can still swim to safety, add the stock on the Fool's portfolio tracker to keep an eye on its progress -- or descent into irrelevancy.

Ready for a resurrection
Just because your stock has taken a beating doesn't mean it's going to roll over and die. Markets are known for overreacting. A closer look at what's happened to your stock can give you an edge over other investors who just react to the market's lead.

That's why it pays to start your own research on these stocks on Motley Fool CAPS where you can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from the stock's CAPS page. Then you can decide for yourself whether it's ready to come back from the dead.

Add YRC Worldwide, China Integrated Energy, or Pacific Sunwear to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

FedEx is a Motley Fool Stock Advisor recommendation. Volcom is a Motley Fool Hidden Gems pick. Motley Fool Alpha has written calls on Zumiez, which is a Motley Fool Big Short short-sale recommendation. The Fool owns shares of FedEx and Volcom. 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.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in the article. You can see his holdings here. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1460019, ~/Articles/ArticleHandler.aspx, 12/22/2014 7:52:11 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement