When stocks fall fast and far, they sometimes set themselves up for remarkable rebounds. The following equities suffered dramatic drops over the past week. With help from the 170,000 members of Motley Fool CAPS, we'll see whether any of them have the potential to bounce back:
How Far From 52-Week High?
|Himax Technologies ||(41%)||$1.75||****|
Companies are selected by screening on finviz.com for abrupt 10% or greater price drops over the past week. 52-week high and recent price data provided by finviz.com. CAPS ratings from Motley Fool CAPS.
Five super falls -- one superball
There are no two ways about it. If you owned any of the five stocks named above last week, you're significantly poorer for it today. So what went wrong?
If I had to sum it up in two words, I'd say "irrational exuberance" plagued most of these companies. If I only had one word, it would be "IPO."
You probably noticed that four of the companies in this list haven't been trading anywhere near 52 weeks. Of the four, Dangdang and Youku are the "old men" of the group, having debuted on the Nasdaq way back in December. Renren rang in just last month, while LinkedIn's IPO isn't yet a month old. Already, all four stocks are succumbing to the overheated expectations built into their IPOs, and falling fast.
The odd man out in this group is Taiwanese semiconductor firm Himax Technologies. No fly-by-night operation, Himax has been public for several years now. It also breaks away from the pack with the fact that, while most Fools dismiss the IPO gang with a snort of derision and a one-star rating, Himax receives a strong four-star rating from our CAPS community.
The bull case for Himax Technologies
In the world of semiconductors, Himax is no Intel
Also to be liked, says TWKommisar, are that Himax has "no debt, solid assets, and a key piece of the LCD flat panel display market."
Meanwhile, this year alone, no fewer than three Fools -- Bill292, dunloggin, and skisnob -- have cited the company's (supposed) 9.8% dividend yield as a reason to own Himax.
I suppose if you're in the market for a high-tech semiconductor stock with income potential, getting a dividend more than twice Intel's 4% yield, and more than five times the payout at Texas Instruments
Read the fine print ...
Himax is one of those rare stocks that pays its dividend annually, you see. While most income investors probably don't care how many pieces their dividends get chopped into, as long as they arrive in the mail on time, companies that pay annually tend to give data providers fits. Case in point: Yahoo! Finance currently has Himax pegged for a $0.24 annual dividend, and a 13.7% dividend yield -- when in fact, Himax clearly stated earlier this month that this year's dividend is only $0.12 -- and a 6.1% yield.
... but don't forget the large print
Disappointed? Don't be. While the dividend yield may not be as great as it looks initially, 6.1% is still pretty darn generous. What's more, the rest of Himax's numbers look just as attractive.
Valued on its GAAP earnings, for example, Himax sports a mere 13.4 P/E ratio -- very attractive in light of its 15% long-term growth rate. Free cash flow doesn't quite measure up, but at $17.5 million generated for the past 12 months, is still robust enough to keep the company's enterprise value-to-free cash flow ratio at 14.2, comfortably below its growth rate. And while growth has been notably absent from Himax's recent performance, management has promised to deliver 15% sequential sales growth in Q2 as it launches new chips for the flat-panel industry and expands into tablet PC offerings for Japanese manufacturers.
Time to chime in
With a cash-rich, debt-free balance sheet, a low stock price, and a high dividend yield, Himax looks well-positioned to bounce back from its recent 52-week low. Or, at least, that's what I think.
What we'd really like to know, though, is your opinion of Himax. If you've got an opinion, we've got a place to share it: Motley Fool CAPS.
Fool contributor Rich Smith does not own shares of any company named above, but The Motley Fool owns shares of Texas Instruments, and The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Intel and creating a diagonal call position in Intel.
Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.