Why We're Avoiding Rackspace and Plug Power

The Motley Fool's top analysts discuss why these stocks don't interest them.

May 13, 2014 at 6:07PM

Shares of Rackspace Hosting and Plug Power climbed today, but should investors look at the bigger picture? In today's "Movers and Shakers" segment of Investor Beat, Chris Hill and Motley Fool analyst Mike Olsen discuss these two stocks.

Rackspace is up 8.9% after better-than-expected first-quarter results, with a 16% revenue increase and a 5% boost to profits. But Mike argues that cloud-based server hosting is a horribly commoditized market, with companies such as Amazon.com, Google, and Microsoft cutting their prices up to 85% in the last quarter. Mike questions Rackspace's ability to maintain consistent revenue in such an environment, but he sees a bigger issue that may be indicative of Rackspace's own feelings about its future: It hasn't purchased any new shares, even though the price has been nearly cut in half over the past 52 weeks. 

Chris and Mike also dive into Plug Power's recent uptick, one day before an expected earnings loss. Mike has qualms with the viability of fuel-cell technology but finds it odd that the company, arguably the leader in its space, expects only $70 million in revenues and no profits.

See more in the following video.

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Chris Hill owns shares of Amazon.com. Michael Olsen, CFA, owns shares of Microsoft. The Motley Fool recommends Amazon.com, Google (A and C shares), and Rackspace Hosting and owns shares of Amazon.com, Google (A and C shares), and Microsoft. 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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