Why LeapFrog Enterprises, Intrepid Potash, and Whole Foods Market Tumbled Today

The stock market generally gained ground today, overcoming weakness from poor economic data, but these stocks never bounced back. Find out why here.

Feb 13, 2014 at 8:31PM

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.

Major stock market benchmarks gained ground Thursday, overcoming early losses and steadily advancing throughout the day to end up roughly half a percent. But for LeapFrog Enterprises (NYSE:LF), Intrepid Potash (NYSE:IPI), and Whole Foods Market (NASDAQ:WFM), the news wasn't as good, as all three stocks surrendered substantial losses today.

LeapFrog fell 9% as the educational-toy manufacturer saw sales for the important holiday quarter drop by 24%. The company managed to break even, but greater competition for its LeapPad tablet line from full-fledged tech-company tablet makers hurt LeapFrog's results. Moreover, with traditional toys failing to sell well, LeapFrog will need to work hard in order to bolster the LeapPad's prospects by creating more proprietary content. Otherwise, LeapFrog's ecosystem won't have enough barriers to entry to keep competitors out, and the company's guidance seems to foresee some challenges in getting revenue back on an upward track.

Intrepid Potash also dropped 9% after the fertilizer company posted poor quarterly numbers last night. Intrepid reversed a year-ago gain, losing $8.2 million on an adjusted basis on a 33% drop in overall revenue that reflected falling prices of potash during 2013. The company also announced production and sales goals for 2014, with potash production expected to come in between 830,000 and 870,000 tons. The company expects to pay more attention to operational costs and optimizing efficiency in light of the plunge in potash prices, but investors aren't convinced that Intrepid will be able to recover its lost ground in the near future.

Whole Foods Market declined 7% after disappointing investors with slower growth than they had expected to see from the upscale grocer. Same-store sales increases of 5.4% might sound good for most retailers, but trends like greater competition and an increasing emphasis on value pricing could eventually lead to long-term erosion of Whole Foods' competitive advantage. Already, sales grew just 10% from year-ago levels, while earnings per share was up just 7%. If that continues, the long growth trajectory that Whole Foods has flown on for decades could finally fall back to earth.

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John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends LeapFrog Enterprises and Whole Foods Market. The Motley Fool owns shares of LeapFrog Enterprises and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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