Why J.C. Penney, E-House China Holdings, and Armstrong World Industries Tumbled Today

A rising stock market wasn't enough to carry these three stocks higher. Learn more about the reasons why.

Feb 24, 2014 at 8:30PM

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.

Stocks continued their impressive run Monday, building on their gains from last week, and sending the Nasdaq Composite to its best close in 14 years. Yet, even on a day in which general bullishness was a major support for most stocks, J.C. Penney (NYSE:JCP), E-House China Holdings (NYSE:EJ), and Armstrong World Industries (NYSE:AWI) missed out and posted substantial declines on the day.

J.C. Penney fell 7% ahead of its earnings report on Wednesday, with a negative report from department-store peer Dillard's (NYSE:DDS) weighing on the entire sector today. Dillard's said that it missed earnings expectations by a full 10%, again citing the oft-mentioned highly competitive promotional discounting environment as hurting bottom-line figures. Given that Dillard's has generally been healthier than J.C. Penney, the fact that Dillard's has had problems bodes even worse for J.C. Penney's efforts to execute a successful turnaround in 2014.

Online Chinese real-estate service provider E-House dropped almost 10% after reports from Chinese media sources that banks are starting to implement tighter credit policies on property developers in the emerging-market nation. That was bad news for E-House and rival SouFun (NYSE:SFUN), which fell 6%, as demand for their services depend on a healthy market for real estate. Many analysts have called for a correction in the red-hot property market in China for years, and if reports of tighter credit prove true, it could be the catalyst to bring a much-need correction for the market.

Armstrong World Industries dropped 9% after reporting fourth-quarter earnings that disappointed investors this morning. Armstrong's revenue rose almost 8% from year-ago levels, with strength in its wood-flooring product line, and better sales volumes in its building-product division. But operating income dropped 28% for the quarter, as raw-materials costs for lumber and higher general expenses weighed on the company's profitability. With guidance for the full 2014 fiscal year that was generally well below what investors were looking for on the earnings front, Armstrong's results support the conclusion that growth prospects for its business might not be as strong as recent economic conditions would suggest.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of Dillard's. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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