Greece's default barely moved the markets at all. But if your stock took a nosedive, don't panic. First, let's see whether it had good reason to fall. Sometimes, panic-fueled drops can make excellent buying opportunities. Here are two of the latest crop of cratered stocks that could provide a possibility for profit:
CAPS Rating (out of 5)
|Green Mountain coffee Roasters |
Source: Motley Fool CAPS.
Although well off its highs, the Dow ended up in positive territory on Friday, rising 14 points -- not bad considering what a sovereign default portends. So stocks that went down by large percentages anyway are pretty big deals.
I don't feel the power
Late last year, energy producer Dynegy filed for bankruptcy protection with a surprising plan to protect equity investors ahead of bondholders. It was unusual in that bondholders typically stand first in line to be made whole while stockholders get nothing. The bankruptcy filing was also unique because Dynegy sought protection for just one of its units, Dynegy Holdings, which it had transferred rich assets out of earlier this year.
Bondholders, being the shrewd investors they are, weren't standing for it. Public Service Enterprise Group
Predictably, Dynegy's shares were sent tumbling. Highly rated CAPS All-Star tallenuk thinks the market overreacted, and while perhaps true, the finding injects a large amount of risk, as it's uncertain how the energy producer unwinds this in bankruptcy courts.
Investors who believed in Green Mountain Coffee Roasters' ability to navigate patent expiry and increased competition discovered it was like driving with a cup of coffee on the dashboard: possible, but likely to result in a scalding. And so they were on Friday, when Starbucks
Part of the investment thesis was since Starbucks, Dunkin Brands
The single-cup brew machines will soon be commoditized while the cups themselves will be a dime a dozen. Add in some penetrating questions about its accounting, and Green Mountain looks more like what's left after a mountain top removal mining operation.
Although I'll be maintaining my underperform rating, fluffheadsr hits on a point that may at least forestall for a while the worst impact it can expect to absorb:
panic sale.. not much to worry about here.. Kuerig low pressure machine has its market..
Starbucks' machine is a high-pressure machine, more akin to Nestle's Nespresso espresso maker than Green Mountain's low-pressure coffee unit. But it doesn't take much imagination to see a migration to that market, too.
Add the embattled java slinger to the Fool's free portfolio tracker to keep apprised of what's brewing, and tell us on the Green Mountain Coffee Roasters CAPS page your opinion on how it addresses these credible threats.
Ready for a resurrection
Just because your stock has taken a beating doesn't mean it's going to roll over and die. Markets are known for overreacting. Balance out the extremes by finding companies the will help you build a solid retirement portfolio. You can find them in The Motley Fool's report "3 Stocks That Will Help You Retire Rich." This is a special free report that you can access right now simply by clicking here -- it's free.
Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of Starbucks and Green Mountain Coffee Roasters, as well as creating a lurking gator position in Green Mountain Coffee Roasters and writing covered calls on Starbucks.
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