The Market Crushed My Stock!

The market roared to life on the hope that Europe saved itself, but even though your stock took a nosedive, 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)

Thursday's Change

TriQuint Semiconductor (Nasdaq: TQNT  ) **** (25.9%)
McDermott (NYSE: MDR  ) ***** (25%)
AXT (Nasdaq: AXTI  ) *** (22.3%)

With the markets soaring 339 points yesterday, or 2.9%, stocks that went down by even larger percentages are pretty big deals.

A kick in the pants
Has Apple (Nasdaq: AAPL  ) lost its Midas touch? After coming up 3 million iPhones short of consensus expectations, TriQuint Semiconductor reported guidance that also fell short of forecasts.

After it was revealed the chipmaker had two chips included in the latest iteration of the Siri model, expectations ran high that TriQuint would realize significant sales growth. So when it reported earnings yesterday that offered guidance for adjusted earnings of $0.06 to $0.08 per share on $214 million in revenues, there was some head-scratching that it would so wildly miss analyst estimates of $0.14 a share on $215 million in sales.

But it's not just TriQuint that's hitting a dry patch. Although the smartphone market has been buoyant during the recession, helping prop up any number of companies, a spate of reports indicates that maybe we're hitting a saturation point. Verizon came in light on its volume number, and I was never a fan from the beginning of Radio Shack or Best Buy's (NYSE: BBY  ) moves to double down on the smartphone phenomenon, and recent earnings misses show why.

Interestingly, Nokia (NYSE: NOK  ) , which migrated to the Windows OS for its phone, beat sales expectations. Will we soon see Microsoft ascendant once again?

Yet with TriQuint down, it makes sense that AXT went down with it. The semiconductor substrate maker has also ridden the wave of smartphone and mobile computing growth, as its gallium arsenide substrates form a key component of their development. It also beat earnings expectations in the third quarter but offered weak guidance for the fourth. AXT essentially confirms what TriQuint is saying that it's entering a period of weakness in the market.

CAPS member cbwang888 is still counting on the iPhone 4S to carry the day, as are apparently the 109 All-Stars rating TriQuint, since all of them think it will outperform the broad indexes. You can tell us on the TriQuint Semiconductor CAPS page or in the comments section below if you think we'll start seeing diminishing returns on smartphone investments. And add it to the Fool's portfolio tracker to watch its progress.

Put AXT on your watchlist and see if it can make the connection to new growth if mobile computing ramps up again.

That sinking feeling
Maybe the scale was surprising, but McDermott's cutting its guidance really shouldn't have raised any eyebrows. Last quarter it suffered a blowout as revenues from its Middle East operations fell 30%, and as it notes this time around, that region accounts for 90% of total revenues.

The transition from a shallow-water and mid-water level construction and engineering firm to one that focuses on subsea and deepwater work hasn't been easy for McDermott, and it already said profit margins would be weak in the back half of the year. The earnings preview simply confirmed that.

Management did say the third quarter shouldn't be indicative of its long-term outlook, and that squares with its previous estimate that its ties to Saudi Aramco, along with those to Chevron (NYSE: CVX  ) and ExxonMobil, positioned to recover in the not-so-distant future.

More than 99% of the more than 1,300 CAPS members rating McDermott believe it will go on to outperform the market averages. You can add the construction and engineering firm to your watchlist, and then head over to the McDermott CAPS page and let us know if it can still build a future for itself.

Fool contributor Rich Duprey owns shares of Best Buy, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple, RadioShack, Microsoft, TriQuint Semiconductor, and Best Buy. Motley Fool newsletter services have recommended buying shares of Microsoft, Chevron, and Apple, creating bull call spread positions in Apple and Microsoft, and writing covered calls in Best Buy. 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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