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3 Stocks That Have Been Cut in Half in the Last 12 Months

By Rich Duprey – Nov 25, 2016 at 11:07AM

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Few companies have had a tougher year than these three once-promising stocks.

It's not likely 2016 is going to go down as one of the best years the S&P 500 has ever had, but with a nearly 7% gain over the last 12 months, the index is sporting a respectable return. Pity then those poor stocks that haven't fared even half as well, or worse, the three stocks below, which have lost more than half their value over the past year.

Let's take a look at why the markets chewed them up and spit them out -- and whether there is any hope for their recovery.

Image source: Getty Images.

Endo International: Down 70.3%

Shares of generic-drug maker Endo International (ENDP 7.91%) were already depressed for most of the year as a result of disappointing earnings due to tougher competition, bigger-than-expected declines in pricing, and longer-than-anticipated regulatory delays -- not to mention the company's CEO stepping down in the middle of it all. But a Department of Justice probe into it and more than dozen industry peers, including Mylan (MYL) and Teva Pharmaceuticals (TEVA 0.91%), over possible collusion on generic-drug pricing sent Endo's shares plunging almost 20% on the day the investigation was announced. The irony, considering the reasons for the company's weak earnings reports, was certainly heavy.

While the probe weighs equally on all targeted companies -- and Endo, like many of its peers, has several streams of revenue from a variety of products, so it still has other avenues open to it to make money -- the potential for heightened regulatory scrutiny to open Endo International up to additional delays in drug approval may make it difficult for its stock to rebound. With prices for its drugs falling rapidly, and with its stock deeply discounted, it may be that the best way out for the generic-drug maker is through a merger with a larger rival.

Image source: GoPro.

GoPro: Down 52.6%

Like Endo, action-camera manufacturer GoPro (GPRO 1.88%) knows the depths of depression, and earlier this year its stock tumbled hard after disappointing earnings. But unlike the generic-drug maker, GoPro's stock managed to rally back, doubling in value between May and October. Unfortunately, there wasn't a lot of confidence in the market as the camera maker headed into earnings: GoPro didn't fail to underwhelm, missing estimates as revenues fell 40% and adjusted losses came in much wider than expected.

That's when a recall of its new Karma drone kicked it down further. Unlike rival DJI, which is a dedicated drone maker, GoPro is a camera company trying to shoehorn a drone into its product portfolio, and already it's having technical difficulties doing so. Mimicking the Karma's propensity for falling out of the sky, GoPro's stock is down 22% in November and more than 30% over the past month. The tech company still has its key Hero 5 cameras to fall back on, but consumer demand hasn't been what it anticipated, and its stock could end up grounded for some time.

Image source: Getty Images.

Vivint Solar: Down 61.9%

Rising costs as residential solar systems got more expensive to sell caused Vivint Solar (VSLR) to stumble at the end of last year, but it was a botched merger that may have done it in. SunEdison tried to buy out the solar company in a $1.9 billion cash-and-stock deal, but its yieldcos couldn't sustain the valuations they were supposed to and the whole enterprise collapsed taking SunEdison and its merger with Vivint down. Vivint ended up canceling the deal after its buyer couldn't consummate the merger, and the residential solar company's stock never recovered.

The market doesn't look all that promising for Vivint's leasing business model for its residential solar system, but system sales do look more promising and Vivint is moving with the trend. In short, it's an industry in transition, meaning there's a lot of uncertainty about how it will play out. The bigger unknown is whether Vivint Solar can tap into the change in a big enough way to shine once more on the market, or if its legacy business and failed merger will continue casting a big shadow.

Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of and recommends GoPro. The Motley Fool has the following options: short January 2019 $12 calls on GoPro and long January 2019 $12 puts on GoPro. The Motley Fool recommends Mylan and Teva Pharmaceutical Industries. 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.

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