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Why Did My Stock Just Die?

It could've been worse, but then again it could've been a whole lot better. Still, the markets notched another big gain, but your stock went and took a 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.


CAPS Rating (out of 5)

Tuesday's Change

Accuride (NYSE: ACW  ) ***** (30.0%)
InterOil (NYSE: IOC  ) * (16.8%)
Datalink (Nasdaq: DTLK  ) **** (11.5%)

With the Dow Jones Industrial Average (INDEX: ^DJI) soaring 147 points yesterday, or 1.3%, stocks that went down by even larger percentages are pretty big deals.

A brief pit stop
Going from a profit forecast of $0.40 to $0.50 a share to one that projects a possible loss of as much as $0.05 a share is a big change of fortunes for Accuride, a supplier of commercial-truck parts. Revenue estimates also got scaled back because it can't meet demand for aluminum wheels compared to steel wheels, and it was having some quality-control issues to boot. There's really little surprise that this stock is getting sold off.

Accuride makes steel wheels for trucks and trailers and provides components to original equipment manufacturers such as PACCAR's (Nasdaq: PACR  ) Kenworth line, Navistar's International brand, and Daimler's Freightliner. Aftermarket aluminum wheels carry higher margins than standard steel wheels do and are popular with drivers and owners, but its plants can't meet both the demand of OEMs and also produce enough aluminum wheels. It has a new facility to produce aluminum wheels, but startup costs have been running higher than expected.

Earlier this year, CAPS member pwillis54 said earlier this year of Accuride: "just coming out of reorganization and financial problems, this company is now poised to grow along with the trucking industry in general." That hasn't panned out as expected.

Lots of demand for your products is typically a good thing, but if you can't meet it and end up with quality-control problems, you lose business. Tell us on the Accuride CAPS page whether you think it still has drive, and then follow its progress by adding the stock to your watchlist.

The devil's in the details
Whether it's digging for gold in Mongolia, drilling for gas in Papua New Guinea, or looking off the west coast of Africa for oil, prospecting in exotic, out-of-the-way locales holds both high potential for profit and great risk of uncertainty. As some companies are discovering now, the governments they do business with can easily become besotted with greed and want to change the rules mid-game.

Gold miner Ivanhoe Mines (NYSE: IVN  ) found that out just the other day, when the Chinese government said it wanted to reopen negotiations to speed up the timetable for when it would own 50% of its Oyu Tolgoi project. It decided it can't wait 30 years to get its hands on the gold there.

InterOil just got the same dose of bitter medicine when the government of Papua New Guinea decided the LNG project it's building in the country was not what it had agreed to and wants changes made. The government thought it was getting a plant capable of producing 7.6 to 10.6 million tons per annum, but InterOil's project starts at just 2 million mtpa.

For its part, InterOil says the project is in line with the agreement because it can be expanded up to 8 million mtpa, with an additional 2 million mtpa achieved through floating capacity.

CAPS member rodessa was saying a few weeks ago that the government was already expressing doubts about the project, so our CAPS participant is probably not too surprised about the development. You can tell us on the InterOil CAPS page or in the comments section below if you agree, and then follow the drama by adding it to your watchlist.

A link with the past
There was no news to drive data-center specialist Datalink lower yesterday, but after reporting a solid second quarter back in July that showed revenues surging 26% and profits up more than 150% of analyst expectations, the stock's actions have been rather choppy. Still, shares have more than doubled over the past year and are up 54% year to date.

In comparison, business "softened dramatically" in July for NetApp  (Nasdaq: NTAP  ) , where sales grew at half the rate they did in May. Management said it couldn't tell yet whether it was going to have to revise guidance for the year.

Although it's flying under the radar of most of Wall Street and Main Street, CAPS members who have rated the data-center designer and supporter believe it will outperform the broad marker averages. Add the stock to the Fool's free portfolio tracker if you think it's ripe for a rebound.

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.

Read/Post Comments (3) | 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.

  • Report this Comment On September 29, 2011, at 2:54 AM, StockEse wrote:

    Oyu Tolgoi is in Mongolia, not China. It's a separate country, and not to be confused with the Chinese province called Inner Mongolia.

  • Report this Comment On September 29, 2011, at 12:55 PM, username127 wrote:

    The ticket symbol above for PACCAR is wrong. The symbol should be PCAR. PACR is a completely different company.

  • Report this Comment On September 29, 2011, at 1:49 PM, silverminer wrote:

    Oyu Tolgoi is primarily targeting copper, albeit with a powerful gold byproduct.

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