Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
With few earnings releases this morning and little macro news, the markets ended the day flat and mixed. The Dow Jones Industrial Average (INDEX: ^DJI) closed down just 1.35 points, or 0.01%, while the S&P 500 rose 2.34 points, or 0.13%, and the Nasdaq moved lower by 3.23 points, or 0.08%. But while the major indexes had a rather quiet day, some big consumer-facing stocks made big moves.
Shares of Green Mountain Coffee Roasters (NASDAQ: GMCR) again defied the critics and rose higher by 1.12% despite a number of negative views arising about the company. On Friday, hedge fund manager Whitney Tilson told Bloomberg that he was maintaining his short position in the stock as increased competition is surely just around the corner for the company. Tilson is referring to the fact that Green Mountains K-Cups are no longer patent protected and companies are currently ramping up production so they can capitalize on the highly profitable signal-serve coffee cups. Then today, a report released by Detwiler Fenton indicated that Green Mountain's pricing power and markets share are being challenged as aggressive discounting is happening from the competition in the K-Cup market. The analyst believes prices of the signal-serve units will continue to come down in the future and that will hurt Green Mountains stock price.
Another analyst move by Piper Jaffray, unfortunately, had the opposite effect on shares of Crocs (NASDAQ: CROX) today as the stock price fell 4.75% after a downgrade. Piper Jaffray's Erin Murphy cut Crocs' rating from overweight to neutral and reduced the price target from $18 to $15. Murphy said that she sees no near-term growth for Crocs as its strategy to move beyond the clog to other items has yet to take hold and discounting has been key to moving merchandise in the U.S. As for both Crocs and Green Mountain Coffee Roasters, analyst opinions are just that -- their opinions -- and should be taken with a grain of salt. Investors should care less about the rating and price targets and focus more on why the rating was changed and then dig into that information before deciding to either buy or sell based on the news.
Lastly, shares of the Chinese Internet retailer E-Commerce China Dangdang (NYSE: DANG) plummeted 9.37% today after the stock was hit not by a downgrade but poor sentiment in terms of Chinese Internet companies and their recent performance. Chinese web portal Sohu.com reported a poor growth outlook for the future, which sent fears that Dangdang may also be performing worse than many investors had previously expected. While it's important to see what the competition is doing, investors shouldn't react to bad results from a competitor and extrapolate those results to a company they own. Wait for Dangdang to report results and see what they are before making any rash decisions that you may regret later.
A deeper Foolish perspective
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