This Week's 5 Dumbest Stock Moves

These five companies got it wrong this week.

May 9, 2014 at 4:46PM

Stupidity is contagious -- even respectable companies can catch it. As we do every week, let's take a look at five dumb financial events this week that may make your head spin.

1. Whole in the head
Organic food items are gaining in popularity, but not fast enough to satisfy Whole Foods Market's (NASDAQ:WFM) own forecasts. The leading grocer specializing in organic and natural products plunged after posting a weak quarterly report and slashing its 2014 guidance for the third time. 

Yes, three times. And it's only May!

Whole Foods originally projected sales to climb by as much as 14% this year. A few revisions later, we're down to a target of 10.5% to 11% in top-line growth for 2014. 

There may not be an alarming sense of panic here. Sales, earnings, and same-store sales all rose during the period, and even the hosed-down outlook still calls for double-digit sales growth. However, investors didn't bid up Whole Foods Market to the point where it trades at a fat premium to traditional grocers to watch it fail to live up to expectations.  

2. Gone in a flash
It was also a rough report taking down shares of Groupon (NASDAQ:GRPN). The daily deals leader did hold up well in its latest quarter relative to expectations, but investors weren't open to forgiving Groupon for its weak outlook.  

The provider of flash sales on local experiences and clearance merchandise sees itself clocking in with revenue of $725 million to $775 million for the current quarter. At the midpoint, it would be short of analyst estimates and less than it generated a year earlier.

At least one analyst -- Northland Securities -- lowered its rating on the stock, slashing its price target in half. Goldman Sachs, Wunderlich, and Evercore Partners stuck to their ratings, but all three joined Northland in lowering their price targets. 

3. The international language of misdirection
Shares of Rosetta Stone (NYSE:RST) tumbled 10% on Thursday after offering up uninspiring quarterly results. The language learning specialist was quick to point out that, excluding its shuttered kiosk business, total bookings would have grown 6% to $61.2 million despite a decline in North America. Revenue would have fallen just 1% -- and not the reported 5% drop -- to $60.8 million on a similar basis.

That's fine. It's not an apples-to-apples comparison if we take Rosetta Stone to task for a domestic kiosk channel that no longer exists. However, why not eliminate the acquisitions along the way to provide a more accurate apples-to-apples comparison of organic growth? Its adjusted results, after all, contain a little bit of padding from its Fit Brains acquisition in December that wasn't around during the prior year's quarter.  

4. Moving Target
Just when you thought that Target (NYSE:TGT) was getting over its massive holiday data breach, it makes waves by reminding everyone all about it. President and CEO Gregg Steinhafel resigned on Monday, clearly a casualty of the reputation-smashing incident that resulted in the breach that exposed 40 million credit and debit card accounts -- and eventually as many as 70 million customers -- over the holidays. 

It was bad, and Target could've done a better job of defending against the breach. It could have also responded sooner, limiting the extent of the information that was stolen. However, Target had already given the market a sacrificial scapegoat when its CIO stepped down two months ago. 

Just let it go, Target. The cheap chic retailer has a lot to do to restore faith in shoppers, but the resignation of its CEO six months after the breach isn't going to help make it go away any sooner.

5. King's game of throwing
Burger King (NYSE:BKW) apparently has a novel strategy for the breakfast war: Let them eat burgers!

Burger Business is reporting that Burger King plans to start offering some of its signature hamburgers and chicken sandwiches during the morning -- as early as 9am -- to combat the increasingly competitive breakfast market. 

In theory, this would be a smart move. How many times have burger-seeking patrons hit a burger joint in the morning only to be told that they're still serving breakfast? However, at a time when chains are getting creative -- think Taco Bell's Waffle Taco -- is this really the best that Burger King can do? C'mon, BK. You're the King. You can do better than a Whopper at 9:14 in the morning.

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John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide. It recommends and owns shares of Rosetta Stone 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.

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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