3 Stocks Worse Than the Dow

So the markets decided the Cyprus bailout plan wasn't a good thing. It certainly didn't help that Jeroen Dijsselbloem, the head of the Eurogroup of eurozone finance ministers, said the Cyprus plan was a "template" for future bailouts, too. Oh, sure, he tried to walk back that statement, but you can't put the toothpaste back in the tube once it's been squeezed out, and the Dow Jones Industrial Average fell 64 points as a result.

The following three stocks got squeezed for different reasons, but don't go running over the cliff with them like a bunch of lemmings just yet: This could just be a temporary situation. Let's first see whether they had good reason to fall, as panic-fueled routs can sometimes lead to excellent buying opportunities.

Company

% Change

Trina Solar (NYSE: TSL  )

(10.8%)

VirnetX Holding (NYSEMKT: VHC  )

(10%)

USG (NYSE: USG  )

(8.5%)

A dim future
It wasn't just Trina Solar that collapsed yesterday, but Chinese solar stocks in general tumbled as JA Solar reported losses for the quarter that exceeded analyst expectations. Panel prices continue to fall, leading revenues to plunge 13% and the solar shop to idle capacity.

With Suntech Power's subsidiary in bankruptcy, the worsening outlook for the industry dragged down Trina and Yingli Green Energy, which fell almost 10% itself yesterday. JA Solar was down 11% as well.

As the Fool's Travis Hoium pointed out, it doesn't matter that JA sold greater volumes of panels, because they're being sold at such a discount it's actually losing money on every panel that goes out the door. There's only so long a company can do that, and considering this was the panel maker's seventh straight quarter of recording losses, there's plenty of reason to think Suntech won't be alone for long.

Finger in the dike
Following the split-decision ruling in VirnetX's patent infringement case against Cisco (NASDAQ: CSCO  ) -- the patents were ruled valid, but the equipment maker didn't infringe on them -- the Internet security specialist tumbled again yesterday as rumors swirled that Apple (NASDAQ: AAPL  ) would appeal its decision. In December, a court ruled that Apple infringed on the same patents Cisco was cleared of violating and was ordered to pay $368 million.

Before the Cisco decision, VirnetX had cobbled together a string of victories that began a few years back with a $200 million decision over Microsoft (NASDAQ: MSFT  ) But the singular loss has created a crisis of confidence that the wall will crack and the patent dam will crumble. The stock has lost more than 40% of its value in the past two weeks, and there's nothing on the horizon at the moment that points to a turnaround.

A bitter pill to swallow 
Building-products supplier USG was pushed into bankruptcy protection in 2001 after it was beset with numerous lawsuits over asbestos claims and emerged in 2006 after making a final $3.1 billion payment to a trust set up for those claiming to have been victimized. It was a successful reorganization that saw shareholder interests protected, creditors paid in full with interest, personal injury claims settled, and the company financially strong.

Yet it was also a period when it was vulnerable to a hostile takeover, so it adopted a shareholder-rights plan that would trigger if anyone attempted to acquire 15% or more of the company. On Friday, USG announced that it was dropping that trigger to just 4.9% for the next three years. It has more than $2 billion in net operating loss carryforwards that it wants to protect because they could be lost in the event of a change in control, so it amended its "poison pill" plan to deter anyone from acquiring more than 4.9% of USG's stock.

The market apparently believes a buyout might not be such a bad thing at this point, and shares of USG fell as a result. Since they could shorten the period if they so chose, the board of directors sounds like they'd still be open to an offer for the company, though it would seemingly have to be at the right price.

Ready for a resurrection
There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded, with more than 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

 


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