Why Harley-Davidson, Inc., Netflix, Inc., and Allegheny Technologies Inc. Are Today's 3 Worst Stocks

Abandoning its all-American image, expanding internationally, and investing heavily in future growth sent these 3 stocks lower today

Jul 22, 2014 at 7:54PM
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All 10 sectors advanced in the stock market today, as existing home sales rallied for a third straight month and corporate earnings generally put Wall Street in a buy-happy mood. The mood rings of Harley-Davidson (NYSE:HOG), Netflix (NASDAQ:NFLX), and Allegheny Technologies (NYSE:ATI) investors, however, were of a different hue: a hue that told them to run for the exits. The stocks ended as three of the worst performers in the S&P 500 Index (SNPINDEX:^GSPC) today, which itself gained 9 points, or 0.5%, to end at 1,983.

Harley-Davidson shares dived 5.4% on Tuesday, ending as the worst performer in the 500-stock index. Although the all-American motorcycle manufacturer handily beat earnings expectations, it was what the company said about its future that worried investors. Harley-Davidson lowered its shipment outlook for the year to 270,000 to 275,000 from a prior estimate of 284,000. U.S. consumers just aren't as passionate about their hogs as they used to be. That could be due to an aging population or the company's decision to introduce a lighter-weight bike that's largely made of foreign parts -- an unprecedented shift in Harley-Davidson's manufacturing philosophy. The slight departure from Harley's image as a maker of heavy bikes that's American as apple pie seems to be haunting shareholders already.

Nowonnetflix

Netflix that its content will win out in the long-term. Image Source: Netflix

Netflix is also taking its business abroad, although not because of the cheaper parts and labor. The streaming video provider is aggressively pursuing international customers as it tries to gain a foothold in Europe, a strategy it plans to push heavily in six European countries come September. Netflix, which crossed the 50 million subscriber mark last quarter, can and will expand abroad, primarily because the U.S. market is becoming somewhat saturated. But while the subscriber gains could be impressive -- it plans to add about 3.7 million next quarter alone -- analysts worry that the cost of international subscribers may be a healthy chunk of Netflix's margins. Missing Wall Street's expectations for earnings and revenue guidance in the coming third-quarter, shares dropped 4.6% today.

Shares of aircraft supplier Allegheny Technologies tumbled 3.5% after missing on earnings and coming in slightly ahead of sales expectations. Allegheny lost $0.03 per share on revenue of $1.12 billion last quarter, as the company invested in two growth projects that ate up its leftover profits. While it's great to see Allegheny investing in new projects to beat its competitors in the long-term gain, the company seems to have some competing goals that could clash with one another in the near-term. The company plans on doubling capital expenditures to about $200 million in the second half of 2014, yet it's seeking to reduce gross costs by $100 million for the year.

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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.

The Motley Fool recommends and owns shares of Netflix. 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.

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