Why PetSmart, Inc., Wynn Resorts Ltd., and First Solar, Inc. Are Today's 3 Worst Stocks

Analyst downgrades and worries from China sent these three names to the bottom of the stock market today

Apr 15, 2014 at 8:02PM

Around lunchtime today, the stock market was dropping like a rock, threatening to resume a sell-off that left investors fearing a 2000-like, tech-driven market plunge. Just a few hours later, nine in 10 sectors were showing gains and things were peachy again. Although the housing market didn't perk up as expected in March, inflation rose modestly, which was a bullish enough indicator for Wall Street. Apparently PetSmart (NASDAQ:PETM), Wynn Resorts Ltd. (NASDAQ:WYNN), and First Solar (NASDAQ:FSLR) didn't get the memo: Each stock tumbled on Tuesday, even as the S&P 500 Index (SNPINDEX:^GSPC) added 12 points, or 0.7%, to end at 1,842. 

PetSmart's 4% losses secured its finish as the day's worst S&P performer. Bank of America/Merrill Lynch hit PetSmart with a dreaded downgrade Tuesday, citing the company's ebbing market share resulting from rising competition. It's a dog-eat-dog world after all, with businesses constantly at each other's throats competing for business. PetSmart should know this well by now. After signing a multiyear deal to buy Martha Stewart-branded pet foods from Age Group, Martha Stewart Living then tried desperately to sell its products to PetSmart directly, circumventing the agreement it had with Age Group, the third-party seller. This is according to a lawsuit brought by Age Group in New York courts, in which PetSmart is not named as a defendant. 

Analyst sentiments quite frequently act as short-term catalysts, either propelling shares skyward or sending them on their merry way to the ground. Such sentiments were not only behind PetSmart's decline today, but also Wynn Resorts, which tumbled 3.6% on Tuesday. The slump came after tightening lending conditions in China saw credit decline nearly 20% in March from the same month last year, a dip that portends lower gaming revenue in Macau, according to Wells Fargo analysts. While China's effort to curb growth represents a legitimate concern for the Macau-reliant casino industry, make sure to take upgrades, downgrades, and sidegrades with a grain of salt: analysts don't often share incentives with the common investor. 

Hybrid Solutions Solution First Solar

Source: First Solar website.

Finally, First Solar shares shed 2.8% today, even as (gasp!) there wasn't a prestigious analyst poo-pooing the stock. Forgetting Wall Street's opinion for a moment, my colleague Sean Williams identified First Solar as one of 3 stocks near 52-week highs worth selling last week. He worries that, while First Solar's business is sound, investors have been too giddy with optimism, overlooking the fact that U.S. solar power is subsidized by tax incentives that could disappear in the coming years. At the same time, China has pledged to continue its financial support of its own solar industry, raising questions about how competitive First Solar can be on a global scale.

Say goodbye to "Made in China"
China may be subsidizing the solar industry, but innovation isn't merely a function of how much money you throw at something. For the first time since the early days of this country, we're in a position to dominate the global manufacturing landscape thanks to a single, revolutionary technology: 3-D printing. Although this sounds like something out of a science fiction novel, the success of 3-D printing is already a foregone conclusion to many manufacturers around the world. The trick now is to identify the companies -- and thereby the stocks -- that will prevail in the battle for market share. To see the three companies that are currently positioned to do so, simply download our invaluable free report on the topic by clicking here now.

John Divine has no position in any stocks mentioned. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends PetSmart and Wells Fargo and owns shares of Wells Fargo. Try any of our Foolish newsletter services free for 30 days. 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.

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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