A sputtering economy, implosions at financial institutions, or just plain bad management -- on any given day, investors can name a number of reasons to sell a stock. Yet while panic never benefits investors (unless they're calmly snapping up values while others freak out), it's good practice to play devil's advocate with investments from time to time.
In the case of personal navigation device (PND) maker Garmin
Competition: While many believe GPS smartphones from makers like Apple
Slowing Financials: Although Garmin posted a 23% rise in sales for its second quarter, its marine division sales dropped 11% and overall gross margins fell 470 basis points. Without the Nuviphone this year, the company has factored out this revenue and lowered its guidance for 2008 sales and earnings. And some only expect the negative trends to continue.
Weaker Product Pricing: PND prices fell by about 25% in the first half of this year and some expect further drops. And with the Nuvifone releasing in a crowded smart phone market in 2009, pricing pressure is expected from new products like Deutsche Telekom's
Of course, Garmin has faced serious threats before and overcome them in the past. But the question today is whether or not the company can do so again -- and reward investors. That's why CAPS is such a great resource to augment your own analysis.
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A self-proclaimed perfectionist, Fool contributor Dave Mock is learning to leave good enough alone. He owns shares of Motorola and Garmin, which is also a Global Gains recommendation. Nokia is an Inside Value selection. Garmin and Apple are Stock Advisor recommendations. The Fool's disclosure policy tips generously.