Why AeroVironment, Acorda Therapeutics, and Chicago Bridge & Iron Tumbled Today

Stocks generally gained ground Tuesday as investors remained confident despite some signs of challenges for the U.S. economy. Inflation spiked upward in May, and activity in the homebuilding market declined, raising some fears about the sustainability of some of the key drivers of the recovery during the past several years. Also weighing on market sentiment were negative news reports concerning AeroVironment (NASDAQ: AVAV  ) , Acorda Therapeutics (NASDAQ: ACOR  ) , and Chicago Bridge & Iron (NYSE: CBI  ) , each of which posted substantial losses today.

AeroVironment fell more than 5% after an analyst downgraded the stock, reducing its former buy rating to a hold rating. The maker of unmanned drone aircraft has soared during the past year, with prospects for huge growth for new applications for drones ranging from package delivery to surveillance of corporate facilities in remote locations. Just in the past several weeks, AeroVironment shares have jumped 15% as approval of drone use for BP's Prudhoe Bay facilities, and the prospect of greater unmanned aerial vehicle use in a possible escalation of hostilities in Iraq, helped make investors more aware of the company's potential. Even after a modest pullback today, AeroVironment still has plenty of potential to reverse course and start giving shareholders gains again.


Source: AeroVironment.

Acorda Therapeutics dropped 9% after the biotech specialist in multiple sclerosis, spinal cord injuries, and other nervous-system disorders said it would offer convertible notes to raise capital. Acorda said that it would raise $300 million by issuing seven-year convertible senior notes. Pricing of the note offering hasn't happened yet, but the fear that investors have is that the conversion option will potentially dilute existing shareholders, especially if the stock is able to reach its full potential. Nevertheless, for companies whose best prospects lie well in the future, raising capital is a necessary risk that early investors run in exchange for the possibility of getting huge profits.

Chicago Bridge & Iron declined 7% after facing allegations from a small research firm of using "creative acquisition accounting." Ever since Chicago Bridge announced that it had won a contract from a Canadian energy-infrastructure company to help provide front-end engineering and design work on a liquefied natural gas export facility in Canada, the stock has moved downward. Yet, with more attention than ever on engineering and construction projects, especially in the booming energy sector, Chicago Bridge & Iron has a true opportunity for growth if it can capture its fair share of business from companies both within and outside the energy industry.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2998090, ~/Articles/ArticleHandler.aspx, 8/22/2014 11:58:09 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement