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This Week's 5 Dumbest Stock Moves

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Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.

1. Misleading headline of the week
(Nasdaq: SPLS  ) picked an amusing way to communicate a wave of store closures and downsizing this week.

"Staples, Inc. Announces Strategic Plan to Accelerate Growth," reads the headline of Tuesday's  press release.

Sure, the press release begins with the office supply superstore chain detailing plans to ramp up its online product line, but then the company turns its attention to its bricks-and-mortar retreat.

Staples now plans to shrink its retail square footage by roughly 15% in North America between now and fiscal 2015. The fiscal year's plan entails closing a net of 30 stores and shrinking the size of 30 other stores through downsizing or relations.

It's hard to take a press release promising the acceleration of growth seriously when the store count is shifting into reverse.

2. Kung Fu pandas go WOW
 In a move to breathe new life into its fledgling World of Warcraft franchise, Activision Blizzard (Nasdaq: ATVI  ) introduced an expansion pack for the online massive multiplayer role-playing game. 

Mists of Pandaria is an odd title, but even stranger is the addition of the titular pandas as bears with mad martial arts skills. Did Jack Black sign off on this?

Yes, there's apparently some panda warrior lore that predates Kung Fu Panda, but why would Activision Blizzard go this way unless it's trying to woo young gamers into the franchise that peaked at 12 million gamers two years ago, but is now closer to 9 million players?

3. Creepy crawlers collide
Caterpillar (NYSE: CAT  ) took a hit after updating its outlook for 2015.

The maker of construction and mining gear is now expecting to earn between $12 and $18 a share in 2015. That may seem impressive, but keep in mind that Caterpillar's previous guidance was calling for a profit per share of $15 to $20.

Caterpillar doesn't make the cut this week solely because it's hosing down its outlook. That happens often. My beef here is that Caterpillar is issuing guidance that's three years out in the first place.

Selling construction and mining equipment is naturally a cyclical endeavor. Taking out a crystal ball and looking ahead three years is more wishful thinking than science. Come on, Caterpillar. Cut it out.

4. Nook around
Barnes & Noble (NYSE: BKS  ) has a bad poker hand, but it's too proud to fold, so it keeps calling.

This week the struggling book retailer introduced a video service component -- and the Nook HD and Nook HD+ tablets optimized for video streaming -- to its Nook line.

Barnes & Noble has lined up some impressive content partners, but what's the endgame here? It's not going to be able to evolve its video ecosystem the way that the more popular iPad and Kindle Fire -- and perhaps even the Nexus and eventually the Surface -- have over time.

If Barnes & Noble had money to burn or the time to see this cutthroat competition play out it would be reasonable to give the retailer a shot. Unfortunately, the chain lacks the former so it also lacks the latter.

5. Small box getting smaller
(NYSE: RSH  ) is going to have a hard time finding a qualified CEO.

James Gooch left the troubled consumer electronics retailer this week.

He wasn't there long, but the stock still shed 80% of its value during his tenure. Seeing margins deteriorate as the company went deeper into the smartphone rabbit hole was bad, and breaking a 25-year streak of payouts when it suspended its dividend this summer was even worse.

The departure of an ineffective CEO is often applause-worthy, but it's hard to imagine too many turnaround experts taking this on unless RadioShack offers up more money than it can afford.

 Get smart
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The Motley Fool owns shares of RadioShack and Staples. Motley Fool newsletter services have recommended buying shares of Staples and Activision Blizzard. Motley Fool newsletter services have recommended writing puts on Barnes & Noble and creating a synthetic long position in Activision Blizzard. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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  • Report this Comment On September 28, 2012, at 1:47 PM, Foram wrote:

    Re: Mists of Pandaria - Millions of prospective Chinese players might be more of a factor behind the focus of this expansion. That's a much bigger potential market than Kung Fu Panda fans.

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