Why Chesapeake Energy Corporation, Cliffs Natural Resources Inc., and NetApp, Inc. Are Today’s 3 Worst Stocks

From oil and gas to coal and iron ore, energy companies had a tough time on Wall Street Friday, as did one tech stock.

May 16, 2014 at 7:34PM

Stocks finished the week on a higher note Friday, as surprisingly strong real estate numbers brought out the bulls today. April housing starts soared, rallying more than 13% from March levels as developers got busy as the cold weather abated. Regardless of how busy developers were getting, investors in Chesapeake Energy Corporation (NYSE:CHK), Cliffs Natural Resources (NYSE:CLF), and NetApp (NASDAQ:NTAP) still headed for the exits. The three stocks ended as the worst performers in the entire S&P 500 Index (SNPINDEX:^GSPC) on Friday. The S&P, for its part, added seven points, or 0.4%, to end at 1,877 today.

Shares of Chesapeake Energy shed 4.7% in trading as the company announced a flurry of strategic sales and spinoffs intended to reduce its leverage and shore up its balance sheets. The company should raise more than $4 billion in 2014 from the moves, which will reduce debt by $3 billion. As a result of these divestments, the oil and natural gas company expects to see production hit by 2% this year, while also expecting its growth rate in 2015 to slow markedly.


Cliffs Natural Resources' mining operations. Source: Company website.

Coal and iron ore miner Cliffs Natural Resources lost 3.3% today, as the stock took a hit from an analyst downgrade. Wall Street research firm Macquarie downgraded shares from a neutral to an underperform rating, just days after Cliffs Natural reported its first-quarter results. The company's coal business is hemorrhaging money, extracting coal for an average of $119.41 a ton, only to sell it for $88.61 a ton to its customers. As any kid with a lemonade stand can tell you, this is a broken business model.

Downbeat analysts were also the bane of NetApp's existence today, as the stock tumbled 2.8%. The data storage and solutions company has seen its stock price target lowered at two consecutive Wall Street firms: Wednesday, Piper Jaffray cut its target from $52 to $40 a share; yesterday, Wunderlich trimmed its target price from $44 a share to $34 a share. Each analyst seems to think growth is stagnating at the company, an opinion shared by a Raymond James analyst on Monday, who downgraded the stock on its falling market share.

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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.

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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