Stocks That Just Lowered the Boom

When a company forecasts lower sales or profits, its stock usually takes a hit. It's not always easy to tell whether your company is having a fire sale or burning down. Maybe it is time to get out -- or maybe it's time to buy more!

To help tell the difference, we pair up dour guidance news with the sentiments of more than 180,000 members of Motley Fool CAPS. If the best stock pickers think the companies still have the power to turn lemons into lemonade, maybe investors should take notice.

Here are two stocks that have recently announced reduced guidance.

Don't blindly sell into their bearish outlook -- you still need to do some research. Use the announcement as a jumping off point for additional research.

Reap what ye sow
The world's gotta eat, but that's not translating into fertilizer sales for PotashCorp, which forecast global demand for its eponymous crop ingredient to increase to 53 million-56 million tonnes this year, down from prior expectations of as much as 58 million tonnes. Its own sales volume is anticipated to come in in the range of 8.8 million-9.2 million tonnes from prior forecasts of 9.2 million-10 million tonnes.

Other nutrients aren't faring as poorly as potash, as phosphates and nitrogen saw volumes and gross margins rise. CF Industries (NYSE: CF) just reported its earnings, underscoring that same outlook: Nitrogen sales jumped 37% and it expects robust corn plantings and favorable natural gas pricing to keep the momentum moving.

Last year, as commodities soared, fertilizer companies boosted production to capture more profits leading to a surfeit of nitrogen and potash on the market. While the nitrogen market has steadily improved, PotashCorp says potash remains in a weak pricing environment. Intrepid Potash (NYSE: IPI) noted the cautious attitude of potash dealers early in the quarter, but said as the weather warmed up more sales came its way.

CAPS member jackycheng believes a ceiling has formed above potash demand and that will continue to weigh on PotashCorp's stock, which is down 19% from a year ago, but more than 30% from its 52-week highs. Tell me in the comments section below or on the PotashCorp CAPS page if you think it's reaping what it's sown.

Taking stock of gas
It's way too early to forecast a recovery in the natural gas markets, but with a production cut of 0.6% representing the largest drop in a year, gas prices have hit their highest level in a month, bouncing off of the sub-$2 level they had fallen to. Of course, inventories remain well above the five-year average, but it seems the cuts Chesapeake Energy (NYSE: CHK) and other drillers initiated are finally having an impact.

But because the industry has been trying to stand on the brakes in an effort to gain control of a vehicle careening out of control, the services industry that supports natural gas players is feeling the effects. Weatherford International said even though its North American segment saw revenues rise 30% in the quarter, a "timid natural gas environment" held it back. With its earnings forecast coming in below analyst expectations for the third quarter, investors are likely expecting the industry to keep its foot off the gas for a while.

Yet 97% of the CAPS members rating Weatherford believe it will be able to bounce back and beat the market averages. Add the industry services firm to the Fool's free portfolio tracker to see if better natural gas metrics will encourage drillers to expand once again, and let us know on the Weatherford International CAPS page what its prospects are.

Looking under rocks
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