My Stock Just Got Crushed

The markets resumed their tumbling ways, but your stock went and took an even bigger nosedive. Don't panic, though. 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)

Thursday's Change

SIGA Technologies (Nasdaq: SIGA  ) *** (43.0%)
Golden Minerals (AMEX: AUMN  ) *** (21.9%)
ProShares Ultra Silver (NYSE: AGQ  ) ** (18.4%)

With the Dow Jones Industrial Average (INDEX: ^DJI) falling 391 points yesterday, or 3.5%, stocks that went down even more are pretty big deals.

Hanging up on growth
It won't be the end of the legal battle between biotechs SIGA Technologies and PharmAthene (AMEX: PIP  ) over the smallpox antiviral drug ST-246, since appeals are probably already being filed, but the latter scored a major victory when a judge ruled PharmaAthene has a right to share in the profits of the drug, a decision that could be worth as much as $400 million to PharmAthene. That company's stock soared 21% on the news.

The judge said he believed SIGA simply got "seller's remorse" after realizing the successful drug it had on its hands and tried to renege on its promise to give PharmAthene a stake. Interestingly, the judge also dismissed the argument that SIGA had breached a binding agreement between the two since the term sheet drawn up during licensing agreement negotiations was labeled "non-binding." PharmAthene offered a "dog ate my homework" excuse of simply forgetting to put the proper heading on.

SIGA is also under scrutiny for how it won a contract from it BARDA, which makes PharmAthene's legal victory here potentially more lucrative. Two congressional committees are investigating why the rules were rewritten to favor the politically connected firm.

While 82% of the CAPS members rating the drug developer think it will outperform the broad market averages, its three-star rating suggests that they think there are better places for your money. Tell us on the SIGA Technologies CAPS page whether you think the market's reaction is patently absurd.

The devil's in the details
One could argue that after Federal Reserve Chairman Ben Bernanke's grim assessment of the U.S. economy, it was unsurprising to see silver slump as it did afterwards. Because of its industrial uses, the gray metal is just as much a play on economic growth as it is an alternative currency and a safe-haven destination like its yellow cousin.

With silver back below $35 an ounce, there's no wonder ProShares Ultra Silver was down big too. As an ETF that attempts to juice its returns by investing in swap agreements, futures contracts, and other complex financial instruments to obtain double the performance of silver, it will be more volatile than the metal itself. Compare that with the iShares Silver Trust (NYSE: SLV  ) , which simply reflects the price of silver it holds.

But what of gold? It dropped 5% as well and hit a one-month low, leaving many to ask whether it's as safe an investment as it's been touted for these harsh economic times.

Until it completed the acquisition of ECU Silver Mining earlier this month, Golden Minerals was an exploration-stage miner with some interesting prospects in Mexico and Argentina but not much else to show for it. The ECU bid solidifies its presence in those regions but gives it mines that produced approximately 380,000 ounces of silver, 10,000 ounces of gold, 182,000 pounds of zinc, and 155,000 pounds of lead last year. Production is expected to fall in the fourth quarter this year, however, as Gold Minerals develops the mine further.

Investors might feel more comfortable holding on to major miners like Newmont Mining (NYSE: AUY  ) or Agnico-Eagle Mines than untested smaller shops like Golden Minerals during these periods, though even that's no assurance of stability. Barrick Gold fell more than 8% yesterday.

Although miners have large overhead that makes them susceptible to cash and credit crunches, even a light business model is no assurance. Silver Wheaton (NYSE: SLW  ) , which sports the ultimate low-overhead cost strategy, was down nearly 13% on the day.

CAPS member icebox40 likes the free-plus you get with Golden Minerals, a miner with good prospects and super-cheap silver on the side, and 26 of the 27 All-Stars weighing in on the miner agree that this seems to be a good long-term play.

You can mine additional opinions on the Golden Mineral CAPS page and let us know whether you think this precious-metals miner has lost its luster.

Ready for a resurrection
Just because your stock has taken a beating, that doesn't mean it's going to roll over and die. Markets are known for overreacting. A closer look on Motley Fool CAPS at what's happened to your stock can give you an edge over other investors who just react to the market's lead. You can decide for yourself whether it's ready to come back from the dead.

Fool contributor Rich Duprey holds no position in any company mentioned. Check out his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.


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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.

  • Report this Comment On September 24, 2011, at 1:40 AM, Shankapotamus wrote:
  • Report this Comment On September 27, 2011, at 12:23 AM, reflector wrote:

    "But what of gold? It dropped 5% as well and hit a one-month low, leaving many to ask whether it's as safe an investment as it's been touted for these harsh economic times."

    gold is not an investment. gold is money.

    those who would ask such a question are stuck in the old ways, and haven't woken up to the fact that the US government is insolvent, the US financial system on the verge of collapse, and the dollar will soon be a thing of the past.

    i give it about 1 year, though that might be generous.

    gold is safe, because an ounce of gold is always an ounce of gold, it is a store of wealth, it is money. once it returns to its rightful throne, and the usurper fiat money is removed, you won't even be able to buy gold for $1,000,000 an ounce, dollars will be worthless.

    gold at a minimum and if nothing else, represents the labor cost (honest work) of mining it and refining it.

    the dollar, meanwhile, represents the willingness of the fed to run the printing presses and print more dollars, debasing them into value-lessness. as bernanke put it, "we can't default because we can always print more dollars to pay our obligations".

    though, of course, paying back one's debts in worthless post-inflation dollars is a form of default.

    according to the US constitution, article one, section 10, only gold and silver are money. the founding fathers knew the dangers of unchecked government.

    the US dollar and most fiat currency worldwide, will be abandoned after the collapse, in favor of the gold standard, abandoned in the 70s by tricky dick nixon.

    france and austria have already just passed laws trying to limit their citizens from freely buying gold & silver, laws trying to prop up the crumbling euro will fail.

    the swiss, meanwhile, have seen the writing on the wall and know what's coming, they have opened a stock exchange denominated not in dollars, nor in swiss francs, but in gold:

    http://www.swissinfo.ch/eng/specials/swiss_franc/Swiss_stock...

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