Why Did My Stock Just Die?

Italy's financial system has brought not only its government to the brink of collapse, but the European Union's, too. Not surprisingly, the markets freaked out yesterday. 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)

Wednesday's Change

Rovi (Nasdaq: ROVI  ) ** (38.7%)
Hyperdynamics (NYSE: HDY  ) * (24.7%)
Primo Water (Nasdaq: PRMW  ) ***** (17.8%)

With the markets plunging 389 points yesterday, or 3.2%, stocks that went down by even larger percentages are pretty big deals.

That's going to leave a mark
Interactive-channel-guide software provider Rovi got its programming mixed up in the third quarter, beating on profits, falling short on revenues, and offering a disappointing outlook for the next year.

In addition to its channel guides, which now see its benefits not accruing till late next year, Rovi makes content-protection software that's included on virtually every videocassette and DVD made, as well as in set-top boxes made by Cisco's (Nasdaq: CSCO  ) Scientific-Atlanta division and TiVo (Nasdaq: TIVO  ) . Yet as the company notes, the segment is basically dead. The revenues it will realize next year on its analog copyright-protection business will barely be a third of what it enjoyed in 2011.

With the flooding in Thailand affecting the availability of many consumer electronic products, an investment in Rovi now looks like dead money. But CAPS member stpatrick31782 also understands that it's hard to time the exact entry point into a stock and figures Rovi's depressed price makes this now as good a time as any.

Stock craters after missing earnings predictions, but revenue was still up. This is a growth industry (I think?) and it will recover from Thai floods in time. Good time to get in.

Put Rovi on your watchlist, and see whether it can dial in to its potential once again.

Off on a tangent
Oil-exploration company Hyperdynamics was sunk because of widening third-quarter losses as costs rose for the exploration well it was required to drill off the African coast of Guinea by the end of the year. Originally, Hyperdynamics had budgeted $95 million for the program, but the cost had risen to $135 million, or 42% more, by the time it started drilling last month because of mechanical issues on the rig and limited port services in Guinea.

Still, for all its promise, Hyperdynamics has no revenues yet, doesn't know if whether will ever have them, and hasn't pumped a barrel of oil. Like CAMAC Energy and VAALCO Energy (NYSE: EGY  ) , Hyperdynamics is hoping the waters off Africa's west coast will provide a lucrative trove of oil. But a lot of these issues are to be expected when you're dealing with exploration-stage companies, and CAPS member Patastic is hoping there are positive developments to come.

Drill ship is there, ready to start. Should know something, either way, by the end of the month. CEO said he was hoping to deliver good news to shareholders in October. I sure could use some good news. I'm long RL.

Let us know in the comments section below or on the Hyperdynamics CAPS page whether you think its drill program will be successful, and add it to your watchlist to be notified of all the latest developments.

Going flat
I think I owe my Foolish colleague Rick Munarriz an apology. I expected Primo Water to cause Rick's preferred investment SodaStream International (Nasdaq: SODA  ) to lose its fizz because of potential placement deals for its at-home soda equipment. Primo already has contracts with Lowe's, Wal-Mart, and other mass merchandisers for its bottled-water product, and I figured it would be easy getting the soda machine there, too.

However, Primo reported problems reformulating its soda flavors, so distribution of the Flavor Station appliance was limited, a disheartening development for the start of the holiday season. Instead of the $5 million to $7 million revenue contribution originally expected, now Primo says it hopes to get just $1 million to $2 million.

Certainly the delay is a disappointment, but it's not insurmountable, and Primo says it has resolved the flavor issue so it will start shipping the appliances. Not soon enough for this year, but it still represents potential. I've said before I wasn't convinced about the long-term possibilities here, but I thought they were brighter than they've turned out to be.

All 29 CAPS All-Stars rating Primo think it can still beat the Street going forward, but let us know in the comments section below whether you see the water bottler popping the bubbly anytime soon, and then add it to your watchlist to see which way it goes.

Fool contributor Rich Duprey owns shares of Cisco Systems, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Wal-Mart Stores and Cisco and has created a bull call spread position on Cisco. Motley Fool newsletter serviceshave recommended buying shares of SodaStream, Wal-Mart, Lowe's, and Cisco, creating a diagonal call position in Wal-Mart, and writing covered calls in Lowe's. 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 (2) | Recommend This Article (5)

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 November 10, 2011, at 7:17 PM, Medicalrecordman wrote:

    PRMW .... wow what a sell-off today, as it was obvious some institution was unloading and certainly in sympathy with GMCR, which also tanked. That said, someone (either short-sellers or an institution) was loading up on PRMW in the $3.00 area and would absolutely NOT less it bust through $3.00 on the downside. Where to from here ? Well the company's forward guidance hasn't changed, but when you're a heavily anticipated growth stock, you have to deliver or your stock gets crushed. Definitely worth a shot here in the low $3's for a bounce.

  • Report this Comment On November 11, 2011, at 3:40 PM, Rowellles wrote:

    Yes, HDY has $39M in cash-on-hand. But there is another $54M in marketable securities, 35M in restricted cash, (restricted for subsequent payment to drilling vendors), and $5M in deposits (associated with the pending acquisition) according to the latest 10K.

    Approximately half the cost of the current drilling program (including long lead time supplies) have already been paid.

    $8M of the escallated drilling costs result from a decision to enhance the well logging, in order to mazimize the understanding of the geology.

    The Sabu well is not being drilled because it is required, but because it represents the lowest hanging

    fruit among the 3,600 sq km of 3D seismic surveyed in the shallow water of the concession.

    The 3D survey of 4,000 sq km of the deepwater area has just begun.

    Finally, the mirror theory and West African transform margin (think Jubilee offshore Ghana) links the recent discovery, Zaedyus offshore French Guiana, with the HDY concession. During the Cretaceous period what is now French Guiana and Guinea shared the same offshore, which Zaedyus has proven to hold significant oil reserves.

    Figures don't lie, but liars (and Motley Fool) figure.

    With a comment.

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