There Was No Bailing Out These Stocks

As it becomes apparent that Greece is on the outs in the European Union -- the IMF is likely to stop providing bailout funds since the country isn't following the requirements to get bailed out -- the fear of falling dominoes is growing. The Dow tumbled 141 points yesterday, or 1.1%. Some companies had their own problems to contend with though and managed to do even worse, many even plunging by double-digit percentages.

So let's see whether they had good reason to drop, as sometimes panic-fueled declines can lead to excellent buying opportunities.

Coughing up a lung
If you're going to be putting all your eggs into one basket, make sure you don't trip. Unfortunately, InterMune exhibits a stumbling gait as it brings its lung-scarring therapy Esbriet to market overseas. While it was able to turn a year-ago loss into a profit in the second quarter, full-year sales of the treatment are running way below analyst expectations.

Almost all of its sales for the drug come from Germany, which generated some $5.5 million in revenues. InterMune is still negotiating with other European countries over Esbriet pricing and hopes to launch the drug later this year. Yet this time around, InterMune didn't reveal how many new patients it signed up to receive the treatment, instead saying the numbers were "significantly" higher than in the first quarter. But with full-year sales expected to be just $20 million to $25 million, that's about half of the $41 million analysts were anticipating. The biotech also sold off rights to its osteoporosis treatment Actimmune for $55 million so it could focus all of its efforts on Esbriet.

I'm still of the mind that InterMune can bounce back, and that a delay of a few quarters is nothing of the magnitude that confronted Sequenom (Nasdaq: SQNM) when it was delayed for two years from bringing its Down syndrome test to market. Pricing has been settled in Germany, and with other countries coming on board soon, InterMune's discounted stock -- it's down 75% from its highs -- ought to be considered a bargain. As long as it doesn't trip and fall again.

Can't scratch that itch
Online pet pharmacy PetMed Express says it suffered from lower sales of flea and tick products because Novartis suspended production of key products and it had to switch to lower-priced alternatives to compensate. The record hot summer is causing an explosion of fleas and ticks, but if pet shops aren't able to sell the premium products "pet parents" want, we might see similar tales coming out of PetSmart (Nasdaq: PETM), which enjoyed an early-year boost from the warm winter, spurring flea and tick med sales.

PetMed says the seasonality of its business is driven by the flea and tick (and heartworm) meds it carries. As this is prime season for them, the loss of the Novartis product line hurt, though it's obviously not going to roll over and play dead. With the stock trading at less than its sales and its enterprise value going for just five times its free cash flow, PetMed Express seems cheap.

I've rated the stock on CAPS to outperform the broad market averages, but let me know in the comments box below or on the PetMed Express CAPS page if you think this stock is still going to the dogs.

Seeing green faeries
There was no company-specific news to account for Central European Distribution's fall yesterday, but the stock has been on a steady trajectory down and has lost almost three-quarters of its value over the past year. Russian Spirits distributor Russian Standard has been looking at CED through the bottom of a bottle, regularly increasing its stake so that it now owns nearly a third of CED's outstanding shares and wants to buy as much as 43% of the company's stock.

Management apparently has been sampling a little too much of its own product, though. Last month it announced that it overestimated its results in Russia for 2010 and 2011, and earlier this month its CEO abruptly resigned without explanation.

Like improperly distilled moonshine, I'd swear off an investment here despite the low valuations. There are obviously a lot more issues that need to be settled before CED is worth taking another shot of, so I've rated it to continue underperforming the markets. Pour yourself another one, though and tell me on the Central European Distribution CAPS page if you'll be seeing double with an investment here.

Ready for a resurrection
CED doesn't even pay its investors a dividend to make it worth their while -- rivals Beam, Diageo, and Brown-Forman all do -- and they're often a key component in one's portfolio. A new Motley Fool report, however, singles out the three Dow companies that dividend-craving investors need to own. It's a free report, so download your copy now!