Technology stocks are some of the most fascinating and lucrative investments that an individual can make. Yet they can also be extremely volatile, taking investors on a roller coaster ride that they may have never anticipated.
Fortunately, here at Motley Fool CAPS, we have a way of anticipating which companies are doomed to defeat and which are poised to pop. Our investing community of 165,000 people aggregates intelligence and ranks stocks according to their ability to outperform the market moving forward. A one-star stock is least likely to outperform, while five-star stocks are the true studs of the investing universe.
Today we'll look at a few tech stocks that have a two-star ranking and are continuing their freefall; hopefully we can gain some clarity to see if they have any chance of recovering their status:
|
Company |
Market Cap (billions) |
13-week Price Change (%) |
P/E Ratio |
|---|---|---|---|
|
Canadian Solar (Nasdaq: CSIQ) |
$0.51 |
(26.2%) |
8.76 |
|
Rambus (Nasdaq: RMBS) |
$2.21 |
(19.8%) |
24.86 |
|
Advanced Micro Devices (NYSE: AMD) |
$5.40 |
(14.2%) |
4.34 |
*Motley Fool CAPS; Yahoo! Finance.
Over the last three months, the S&P 500 has dropped by about 7%, so it's not a total shock to see companies hitting all-time lows. However, the three companies above have gone lower and lower -- and there may not be an end in sight!
Although solar companies haven't exactly hit it out of the park as of late, Canadian Solar seems to be dropping much further than its peers; both First Solar (Nasdaq: FSLR) and JA Solar (Nasdaq: JASO) have seen their share price fall by less than 12%. Although the market was initially bullish on the fact that European subsidy cuts weren't as drastic as expected, the fan fare has faded and now Canadian Solar is feeling the heat. It's not the only when under the microscope -- Applied Materials' (Nasdaq: AMAT) SunFab Line is all but toast after losing several key customers. Fellow Fool Toby Shute recently reported that the company is laying off 400-500 employees and is restructuring its Energy & Environmental Solutions unit.
Semiconductor specialist Rambus can't seem to keep itself out of the headlines these days. In 2008 it filed lawsuits against NVIDIA (Nasdaq: NVDA) and related parties, arguing that the companies had infringed on its patents. On July 28th, a verdict was finally handed down -- the International Trade Commission ruled favorably for Rambus, although NVIDIA is already expected to file an appeal. So that's good, right? Well, yes -- but Rambus is constantly in one legal battle or another, defending its intellectual property claims, so investors have to be ready to ride the legal tide if they're going to keep up with the latest activity. Investing in this company seems more like getting a law degree than it does evaluating a business.
Chipmaker AMD reported a pretty great second quarter, boosting sales by 40% while massively trimming losses compared to the year before. While investors were happy overall with the company's performance, there are still several clouds on the horizon. First, PC replacement is now averaging about 4.4 years, so consumers are buying less frequently, hence a future lower demand for AMD's chips. Second, AMD saw a pretty significant drop in its free cash flow from this year's first quarter. Lastly, AMD admitted to losing server market share to its main rival, Intel.
Foolish bottom line
Sitting at a two-star rank, these companies have lots of room for improvement. However, at the rate they're going, they're bound to be one-star duds in just about no time. Think any of the three companies above have what it takes to regain a respectable status among CAPS members?
Let us know in the comments box below, or head over to CAPS and rank them yourself!
