These Stocks Stumbled Out of the Gate

The market started the new year off with a bang, but not everyone went along for the ride. 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.


CAPS Rating (out of 5)

Tuesday's Change

Williams (NYSE: WMB  ) **** (18.8%)
AMR (NYSE: AMR  ) * (18.3%)
Universal Display (Nasdaq: PANL  ) *** (11.1%)

The markets jumped 180 points yesterday, or 1.5%, so stocks that went down by even larger percentages are pretty big deals.

That's going to leave a mark
Only if you weren't paying attention were you surprised by the near 19% plunge in Williams' stock. That's because the oil and gas pipeline and transport specialist spun off its ownership in WPX Energy, and for every three shares of Williams you owned, you ought to have received one share of WPX. The decline in the former parent's shares is almost the same as the value of the new shares, so you really didn't lose a thing but rather gained the exploration and production business of Williams.

Now investors will decide whether they want to own the E&P play. Oftentimes the new stock is dumped because investors either didn't want the new type of business, in this case preferring the remaining toll-collecting pipeline operations to the riskier exploration venture, or the small number of shares they now hold in it are not so attractive and they'd rather have the cash. In any case, it could be an attractive special situation for those who wish to delve more deeply into whether WXP will be a profitable entity on its own.

Last year, TMFDeej thought Williams made a good break-up candidate to unlock significant shareholder value, and now that it has, MajorBob04 finds economic trends backing bigger gains: "Demand for oil, and the prices, continues to grow, even with slow economic growth. If the European crisis is resolved more quickly, prices will skyrocket and companies like Williams will benefit immensely."

Add Williams to your watchlist to see whether there's additional value to be found in its stock.

Investors grounded
The sound you heard was the last of the investors in American Airlines parent AMR running for the exit. With the New York Stock Exchange delisting the stock before the market opens tomorrow, everyone was squeezing through the emergency exit to get to the tarmac before there was nothing of value left.

Of course, they had taken a big risk by hanging on to (or buying into) the stock after it declared bankruptcy at the end of November. United Continental (NYSE: UAL  ) -- back when it was just United -- previously used bankruptcy to shed debt and cut its labor costs. American had avoided doing the same but said it could no longer afford to stay solvent if major concessions weren't made.

There's no reason to put AMR on your watchlist, but you can add United to see whether it will benefit from its rival's troubles.

Get on the bus
Moving from CRTs to LCDs marked a major upheaval in the television market, but with the switch almost complete, the folks at NPD DisplaySearch expect industry growth to increase at a modest 2% to 4% rate. Certainly not a house-afire result, but considering the slack performance in 2011, this is a hopeful note.

Not that there won't still be upheavals. RealD was devastated by the news that partner Samsung was exiting the 3-D TV market. In turn, Sony just dumped a bucket of cold water on Samsung by leaving the joint venture it has with it to produce LCD screens. And of course, Corning (NYSE: GLW  ) doused everyone with dour notes about demand for its Gorilla Glass that's used in everything from TV screens to tablet computers.

So it shouldn't be so surprising that analysts aren't all that excited about the prospects for Universal Display. Considering it has an important agreement with Samsung, all the changes underfoot have caused Wall Street to dial back its expectations for what it will mean to the OLED-screen technologist.

Although 91% of the CAPS All-Stars weighing in on Universal Display still see it outperforming the market, there does appear to be a turn in the tide of sentiment against it. CAPS member pchop123 still sees it having further to fall, and TMFCandyMountain doesn't think it can live up to the hype.

Add Universal Display to your watchlist, and tell us in the comments section below or on the Universal Display CAPS page whether you think there's still a clear opportunity for growth here.

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. Balance out the extremes by having a mix of stocks, funds, and ETFs that will help you maximize your retirement savings. You can find them in The Motley Fool's brand new report, "The Shocking Can't-Miss Truth About Your Retirement." This is a special free report that you can access right now -- it's free.

Fool contributor Rich Duprey holds no position in any company mentioned. Check out his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Universal Display and Corning. 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 January 05, 2012, at 8:00 AM, integrated wrote:

    PANL could not be in better shape. We will see explosive growth in an explosive and game changing technology directly related to displays and then lighting. These are both $100 billion plus markets. Goldmann raised its target price to $68 and Samsung and PANL just got hitched.

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