Why Intuitive Surgical, Netflix, and Amgen Are Today's 3 Worst Stocks

All three names, two health care and one technology, end in the trenches of the stock market today

Apr 23, 2014 at 8:04PM

A six-day win streak -- in any sort of competitive situation against challenging opponents -- is hard to come by. It's pretty tough to pull off in the stock market, too, and, though the S&P 500 Index (SNPINDEX:^GSPC) wasn't far off from a seven-day rally, the fun finally came to an end and stocks returned to the red on Wednesday. New home sales in March fell sharply and without warning, while lousy earnings from Wall Street also sent the S&P southward, as it shed 4 points, or 0.2% to finish at 1,875. Intuitive Surgical (NASDAQ:ISRG), Netflix (NASDAQ:NFLX), and Amgen (NASDAQ:AMGN) each finished in the depths of the proverbial Wall Street dumpster.

Intuitive Surgical's miserable 11.5% plunge came after the robotic medical systems maker posted similarly miserable quarterly results. Sales in the period were off 24% from the year before, while net income took an even bigger hit, plunging 77%. To its credit, the company actually warned investors two weeks ago that the quarter would be a disaster, even specifically noting that revenue would slump 24%. So what curveball did Intuitive Surgical throw investors today? It looks like the growth in procedures requiring the company's da Vinci product will grow between 2% and 8%, instead of the 9%-12% clip expected previously. 


Netflix is trying to develop an in-house network of proprietary content to differentiate from competitors. Source: Netflix site

For investors who like to invest in simpler, easier-to-understand companies, ignoring robotic surgery companies is a good rule of thumb. While the technology sector isn't simple by any means, many tech companies like Netflix have business models that are easy to understand. Alas, Netflix's elementary business plan was no shield to Mr. Market on Wednesday, as the stock tumbled 5.2%. After Netflix crushed its earnings and revenue expectations on Monday, two direct competitors seriously beefed up their offerings today: Amazon.com will be licensing select HBO programs for Prime members, and AOL is creating its own streaming service. With Hulu, Redbox Instant, and many others coming to life like relatives after a big lotto win, Netflix will have to fight for subscribers harder than ever. And you can be certain its content acquisition costs won't be going down anytime soon. 

Lastly, shares of Amgen lost 5% Wednesday, taking a page from Intuitive Surgical and earning its sell-off by posting a lousy quarter. "Lousy" is relative, of course: sales were actually 6.6% higher in the first quarter than they were in the first quarter of 2013. Its best-selling drug, an arthritis treatment called Enbrel, nearly logged $1 billion in sales all by itself. Amgen took a real hit on its bottom line, where earnings per share, or EPS, fell from $1.88 in the first quarter of 2013 to $1.07 in the first quarter of this year. While that sounds like something investors shouldn't stand for, the bottom line was mostly hit by increasing R&D spending at Onyx, an oncology treatment company it acquired in October. So Amgen made less money last quarter because it's investing in ways to fight cancer -- not such a terrible thing, on second look.

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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 and owns shares of Amazon.com, Intuitive Surgical, and Netflix. 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.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

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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