Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Goodyear Tire & Rubber
So what: Goldman Sachs lowered its rating on Goodyear not one but two notches from "neutral" to "sell," painting an extra-bleak picture for investors. Goldman predicts that high raw material costs will weigh heavily on the company's short-term earnings, and when Goldman speaks, Mr. Market usually listens.
Now what: I'd look into this plunge as a possible buying opportunity. Even with light shipments and rising costs, the company managed to grow its second-quarter top and bottom line 24% and 67%, respectively, suggesting that Goldman's two-notch downgrade is a tad on the harsh side. With operating efficiency greatly improving lately, and a forward P/E of only 5.3, Goodyear seems poised for a bounce.
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