Why Qualcomm Incorporated, TripAdvisor Inc., and Diamond Offshore Drilling, Inc. Are Today’s 3 Worst Stocks

As Howard Hughes might lament: It's all about "the future, the future, the future, the future...."

Jul 24, 2014 at 8:04PM

Stocks were mixed on Thursday, as mixed economic data and mixed corporate earnings combined to make Wall Street hopelessly confused. With a few stocks, however, there was no confusion, and investors were entirely clearheaded about what to do with shares of Qualcomm (NASDAQ:QCOM), TripAdvisor (NASDAQ:TRIP), and Diamond Offshore Drilling (NYSE:DO). The three stocks sold off mercilessly, ending as three of the worst performers in the S&P 500 Index (SNPINDEX:^GSPC) today. The S&P, for its part, added about one point, or less than 0.1%, which was enough to set a new record closing high for a second consecutive day.

Qualcomm posted a blockbuster quarter yesterday, easily topping both revenue and earnings-per-share estimates with ease. As you might imagine, it wasn't Qualcomm's stupendous quarter that had the stock selling off to the tune of 6.7% today. The chipmaker, whose ubiquitous chips go in mobile devices across the globe, also relies upon fees it receives for licensing out its technology for much of its growth. Unfortunately, Qualcomm's global ambitions make collecting royalties akin to pulling teeth, especially in one of its largest end-markets, China. China is notorious for disregarding patent law and stealing the designs and technologies of foreign countries and companies; yet the commercial opportunity of the country makes it impossible to ignore. Qualcomm lowered near-term outlooks due to foreseen difficulties in collecting royalties from its morally obtuse licensees in China.

TripAdvisor, while it also deals in international commerce, doesn't yet rely on China for a huge chunk of its business. While that's fortunate, shares still lost 5.2% Thursday after the travel-advisor website and service company reported earnings that fell well short of expectations. The silver lining for TripAdvisor investors is that sales are still on the rise and, after growing 31% last quarter, it beat expectations. The company, however, failed to keep its costs in check, as total costs and expenses rose a whopping 46%.


Located off the shores of Korea, this Diamond Offshore rig, dubbed "Ocean BlackLion" can drill to depths of 40,000 feet. Image Source: Diamond Offshore.

Finally, shares of contract driller Diamond Offshore Drilling fell 4.3% on Thursday, despite reporting an EPS of $0.65 against analyst EPS expectations for $0.56. Again, the plunging shares are the result of implications for the company's future rather than the company's past performance. Investors buy the future, and today, investors in Diamond Offshore Drilling saw a bleaker one, as one of the company's newest contracts with Murphy Oil reflects a troubling trend in offshore drilling. Day rates -- or the cost a client must pay to rent a rig's services for a day -- have been plummeting. A Cowen analyst noted that Murphy's option to extend its current contract with Diamond Offshore to a three-year, $485,000-per-day contract, was a far cry from recent contracts that called for between $550,000 and $600,000 each day during the three-year period.

OPEC is absolutely terrified of this game-changer
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour. (That's almost as much as the average American makes in a year!) And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable landslide of profits!

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 TripAdvisor. The Motley Fool owns shares of Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

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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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