Why Xilinx Inc., Biogen Idec Inc., and Qualcomm Incorporated Are Today’s 3 Worst Stocks

Two health-care players and one tech name can't manage to stay out of the red on Thursday

Apr 24, 2014 at 8:04PM

U.S. manufacturers are starting to hit their strides this spring, according to new data from the Census Bureau. Durable goods orders rose 2.6% in March from February, notably better than the 2% increase expected by Econoday; the strong demand is a positive leading indicator for U.S. industrial production. While the S&P 500 Index (SNPINDEX:^GSPC) advanced modestly on the good news, investors in Xilinx (NASDAQ:XLNX), Biogen Idec (NASDAQ:BIIB), and Qualcomm (NASDAQ:QCOM) didn't seem to care much about durable goods. The S&P 500 added three points, or 0.2%, to finish at 1,878. 

Xilinx plunged 9.1% today as the chipmaker took a hit from disappointing quarterly results. While sales came in above expectations at $617.8 million, trumping Wall Street forecasts by $5.8 million, earnings per share, or EPS, was $0.53 in the fourth quarter, just missing the $0.55 EPS analysts expected. Forecasting roughly the same quarterly revenue in the current period was enough to earn Xilinx a downgrade from Credit Suisse, which stamped the stock with a "neutral" rating. The company doesn't expect its clients, which range from aerospace companies to high-frequency traders to telecoms, to start shelling out much more for its products anytime soon; if high-frequency trading starts facing more scrutiny from regulators in the near future, Xilinx sales could feel the pressure, as well.

Biotech stocks fell by about 1% today on average. But Biogen Idec wasn't content to be average, slumping 3.9% by day's end. The diversified dru-maker reported first quarter results yesterday before the bell, only to curiously see no reaction from the market. After sleeping on it, investors decided to sell the stock en masse. While Biogen Idec does trade at a lofty 37 P/E multiple, a stock with this sort of growth potential never comes cheap. Tecfidera, its MS treatment, absolutely flew off the shelves in the first quarter, hauling in revenue of $506 million, a 27% jump from the quarter before. It's pipeline also looks appealing, with a hemophilia B drug Alprolix set to debut in May. 


A woman blissfully uses a Qualcomm-enabled device. Source: Qualcomm website

A theme is starting to develop here. Having faithfully read the previous three paragraphs, you might suspect that quarterly results had something to do with Qualcomm's unsightly 3.5% slip today. You'd be right, of course. Not only did Qualcomm sales disappoint last quarter, but it forecast both revenue and earnings for the current quarter that lagged analyst forecasts. As much as investors care about the track record, they're buying into the future, not the past, and Qualcomm didn't impress on either front. On the face of it, the company is in an enviable position as the largest cell phone chip supplier in the world. With smartphones only beginning to gain meaningful market share in China, investors had banked on substantial growth fueled by Asian demand last quarter, but a slow rollout affected results.

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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.

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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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