The markets were ecstatic that the world's central banks collaborated to bail out the profligate spending habits of European governments. So 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
|
| Flagstar Bancorp (NYSE: FBC ) |
** |
(12.6%) |
| StoneMor Partners (Nasdaq: STON ) |
**** |
(12.5%) |
| Shutterfly (Nasdaq: SFLY ) |
* |
(11.9%) |
Sources: Yahoo! Finance, Motley Fool CAPS.
With the markets roaring ahead 490 points on Wednesday, or 4.2% -- their best day in more than two years -- stocks that went down by even larger percentages are pretty big deals.
That's going to leave a mark
Once again, Flagstar Bancorp made a big move in price on no specific company news, surprising since financial stocks were buoyed by the developments in Europe. Other regional banks like Synovus Financial (NYSE: SNV ) and Regions Financial were up 8% and 14%, respectively.
Its recent earnings report showed narrower losses as 30-day and 60-day delinquencies from its residential mortgage loan portfolio remained flat. However, the 90-day delinquency rate continued to rise, though at a slower pace than before. While it remains well-capitalized with Tier 1 capital ratios at 9.31%, Flagstar remains a troubled institution.
While Wall Street analysts are bullish, CAPS All-Stars are more circumspect in their outlook, with just 58% of those registering an opinion thinking the regional banker can beat the broad market averages. Deposit your opinion in the comments section below or on the Flagstar Bancorp CAPS page and add the stock to your watchlist to see if it successfully negotiates the U-turn.
Digging in
Standard & Poor's started playing a dirge for the country's second-largest cemetery operator, StoneMor Partners. Its credit rating, which is already a B, was placed on negative watch.
The death-care services leader is highly leveraged, just as Service Corp. (NYSE: SCI ) and Carriage Services are, but because it is pursuing a growth-by-acquisition strategy, Standard & Poor's expects it to remain heavily indebted. Its master limited partnership structure favors earnings distributions to unitholders instead of repaying debt, so in the event of default the ability to recover principal is considered unlikely.
While the ratings agency notes that StoneMor operates in an industry with fairly predictable growth, cash flow creation is difficult, and with heavy competition weighing against it, the immediate future looks dim. CAPS member ccjeep looks at the distributions StoneMor pays out and is ready to reap the rewards: "Misunderstood by most, well run and will continue to pay hefty dividend plus capital appreciation."
You can tell us on the StoneMor Partners CAPS page or in the comments section below if you think the stock will be buried, and then follow along by adding it to the Fool's portfolio tracker.
Picture this
Online photo shop Shutterfly is facing a blurry future as intense price competition limits its profitability. Rival Snapfish, a Hewlett-Packard (NYSE: HPQ ) subsidiary, is offering steep discounts going into the holiday season, but at least one analyst isn't worried. He says Eastman Kodak (NYSE: EK ) previously attacked the niche on price and Shutterfly lost no market share, so Snapfish's attempt at emulating the maneuver will be unlikely to cause the segment leader to lose focus.
Interestingly, Shutterfly might just buy either of its peers. Having just recently been approved for a $125 million revolving credit facility, the photo company said that for the right price it could be tempted to capture one or the other. Kodak is known for needing to raise cash to offset its declining IP portfolio and might be the right one.
While Wall Street is wildly bullish about Shutterfly -- all 14 Wall Street analysts tracking the online service see it outperforming the market -- the CAPS community is actually fairly evenly divided. Just 54% see it beating the indexes, while less than half of the All-Stars agree. Add the online photo site to your watchlist and see if it will shake it like a Polaroid.
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. With CAPS, you can decide for yourself whether your stock is ready to come back from the dead.
Editor's note: A previous version of this story incorrectly stated that Shutterfly, not Snapfish, is a Hewlett-Packard subsidiary.
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