You love buying your shirts when they go on sale. And who can resist a buy-one-get-one-free offer? So when our stocks go on sale, why do we bemoan their low prices?
Smart investors like Warren Buffett or Marty Whitman love it when their stocks are suddenly selling at bargain-basement prices. For them, these companies become no-brainer buys.
The investors in the Motley Fool CAPS community also like a bargain, apparently. Below, you'll find three companies whose shares are selling at least 50% below their 52-week highs but still earn high honors from our investor-intelligence database. Consider it a BOGO sale on stocks.
|
Stock
|
CAPS Rating (out of 5)
|
% Off 12-Month High
|
| Akamai (Nasdaq: AKAM ) |
**** |
60% |
| EnerNOC (Nasdaq: ENOC ) |
**** |
69% |
| NVIDIA (Nasdaq: NVDA ) |
**** |
51% |
Naturally, we want you to look a bit closer at these stocks before buying. You can get low-priced appliances in the dent-and-ding section of your home-remodeling superstore, but their quality might not be so good. Same thing here: Make sure there's nothing seriously wrong with the company before you plug it into your portfolio.
Take two; they're small
The worrisome part of Akamai's decline is that despite factors that should have helped drive greater volumes, the content-delivery network specialist found them slipping instead. What had once buoyed expectations of 15% revenue growth this year after signing on Netflix to multiyear deals has rather turned into diminutive returns some 33% lower.
Facing pricing pressures from the likes of Limelight Networks (Nasdaq: LLNW ) and Level 3 Communications (Nasdaq: LVLT ) , Akamai has had to scale back its exuberant second-half growth story. Moreover, with AT&T and Verizon (NYSE: VZ ) developing their own CDN service, those pressures are not about to abate.
The last thing it needs in this situation is any additional network outages, such as the brief period it experienced the other night. Though a completely different situation, Limelight's earnings suffered from a hacking attack on the PlayStation Network that left the system down for nearly a month. Going off line for an extended period of time is not an option.
Highly rated All-Star CAPS member TMFUltraLong thinks the selloff in Akamai's stock actually provides the perfect entry point because 13% revenue growth is still a fairly strong result: "I personally added Akamai to my own portfolio last week after the company guided earnings down yet again. Consolidation hype is on the rise and the company continues to pace itself at a 13% growth rate, nothing to sneeze at with a forward P/E of also 13."
Add Akamai to the Fool's free portfolio tracker to see whether reduced expectations can eventually lead to increased growth down the road.
Melt down
While we may have melted in the heat wave that blanketed the East coast at the end of July, the power grid wasn't fried because the Smart Grid kicked in and worked like it was supposed to. Grid operators like flipped the switch and called on demand-response aggregators EnerNOC and Comverge to tap into the pool of volunteer participants to have their energy usage curtailed. EnerNOC alone curtailed more than 1,200 megawatts of power out of the approximately 6,650 megawatts it has under management.
That's how the system is supposed to work. Grid operators identify potential peak usage hours, notify the demand-response aggregators to reel back power from customers who've signed up to participate in the program (they get reduced rates for participating), and we avoid having brownouts or blackouts.
EnerNOC should have wowed Wall Street with its earnings report then, but revenues fell 11% in the second quarter, typically one of its strongest periods, and guidance was significantly scaled back. It's had a running dispute with PJM over alleged double payments it received, and PJM is trying to get the rules by which payments are made changed. They've also eliminated a program EnerNOC heavily participated in, so its revenues over the next year or so will take a big hit as the grid operator accounts for more than half of total revenues.
With 95% of the more than 700 CAPS members believing it will outperform the market, it may be that they're looking for a long-term payoff. Add the green-energy play to your watchlist to see whether investor demand can be aggregated for its stock.
A smaller form factor
Chip designer NVIDIA reported strong earnings today after the market's close. Both Advanced Micro Devices (NYSE: AMD ) and Intel have posted strong results, so a similar turn at NVIDIA is not so surprising by itself. But market-share gains in GPUs at AMD's expense are notable. Some analysts, though, temper that enthusiasm with suggestions of a loss of share in desktop graphics and possibly even the smartphone arena, where up till now NVIDIA has been a powerhouse.
CAPS member MBSmith939 thinks the chipmaker will continue to dominate smartphone graphics, and chrisrobhay2 sees sustainability ahead:
Nvidia has really surprised me with the initiative that it has taken in the mobile sector in recent years. Its Tegra 2 chip has made its way into several tablets, and the new Kal-El chip promises to be five times as fast. They also have the most aggressive release schedule that I've seen, with a new chip arriving each year. Aside from their push in the mobile sector, Nvidia has maintained a decent lead over AMD in the consumer and corporate markets.
Monitor how well NVIDIA fares down the road by adding the stock to the Fool's free portfolio tracker.
Have half a mind
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