Before the opening bell last Thursday, Hidden Gems recommendation Fresh Del Monte Produce
The question of the day is: Why did Mr. Feeney downgrade the stock? He went on to say that Fresh Del Monte Produce has a "reasonable valuation" and that "the company has substantial long-term growth prospects, high cash flow and a strong balance sheet." He also wrote that "a sizeable miss from an inexpensively valued cyclical company is not a major concern."
Now I do not know about you, but to me Wachovia's downgrade does not make much sense given the other statements. If the company really does have "substantial long-term growth prospects" and the rest -- all excellent things to have -- why in the world is Wachovia not advising people to buy more? For a good company, a drop in price should be reason to dance in the streets while buying more at a lower price, not a reason to run away.
I like to view price drops following bad news as Mr. Market presenting me with a buying opportunity. For instance, over the course of last April, Nokia
Try not to let bad news scare you out of owning a company. Emotion is a poor reason to buy or sell. Take the time to think about the news, its impact on the company, and what the company is doing to address it. Perhaps your evaluation will still prompt you to sell Fresh Del Monte or Merck, but at least you'll be making an informed decision.
Bad things happen. Good companies overcome them and justify their place in our portfolios.
Fool contributor Jim Mueller tries really hard to keep his emotions in check, except when he eats Fresh Del Monte's golden pineapple. He owns shares in Nokia and Fresh Del Monte Produce.