Why Cognizant Technology Solutions Corporation, Coach, Inc., and Valero Energy Corporation Are Today's 3 Worst Stocks

From IT to retail giants to oil refiners, these three names were the worst in the stock market today.

Jun 10, 2014 at 7:32PM

The stock market flirted with breakeven levels the whole day on Tuesday, as the three major indexes each ended nearly unchanged. While the day was light on news, investors in Cognizant Technology Solutions Corporation (NASDAQ:CTSH), Coach (NYSE:COH), and Valero Energy Corporation (NYSE:VLO) saw their fair share of action, as the stocks ended as three of the worst performers in the entire S&P 500 Index (SNPINDEX:^GSPC). The S&P, for its part, gave up less than 1 point, or under 0.1%, to finish at 1,950.

Shares of New Jersey-based Cognizant Technology Solutions plunged 4.7% on Tuesday, after a Susquehanna analyst downgraded the stock from "positive" to "neutral" this morning. The IT firm has been growing its top-line figures at breakneck speeds since 2009, never failing to increase revenue by less than 20% annually. But today's downgrade, combined with insider selling that has investors wondering if management knows something they don't, sent shares lower. Cognizant's Steven Shwartz, EVP, Chief Legal & CAO, completely liquidated his stake in the company last week, while a top marketing executive also sold about 85% of his shares the same day.


Source: Coach.

Coach lost 3.1% on Tuesday, as Wall Street continues to be disillusioned with the luxury goods company. One of the biggest issues facing Coach today is a fast-approaching rival, Michael Kors, which is steadily stealing market share from the iconic handbag maker. But in its effort to combat this troubling trend, Coach may be doing itself even more harm, slashing its prices and diluting its powerful brand. Branding power and margins are the name of the game in luxury, so widespread discounts at its traditional stores and a willingness to embrace outlets have investors rightfully concerned.

Finally, shares of oil refiner Valero Energy shed 2.8% today. Trading within shouting distance of its 52-week highs, Wall Street worries that the cyclical nature of the refining industry could temper the stock's upside potential. On top of that, its 1.8% dividend yield is hardly best in the biz, so it's a tough buy to justify on the basis of its income potential alone. However, as my colleague Joshua Bondy noted in a recent article, the company's conservative payout ratio means that even if the industry suffers a sudden decline, Valero is in a position to weather the downfall and maintain its dividend indefinitely.

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John Divine owns shares of Michael Kors Holdings. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends Coach and Michael Kors Holdings and owns shares of Coach, Cognizant Technology Solutions, and Michael Kors Holdings. 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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