A shortened trading session in a shortened trading week helped push the Dow Jones Industrial Average (^DJI 1.01%) 173 points higher, or 1.4%. It was Black Friday, and the index ended the week in the black after four straight weeks of closing lower.
With retailers the focus of attention, it's not surprising that retail king Wal-Mart (WMT 0.71%) saw its shares rise after union-backed protesters failed in their attempt to stop the discount mass marketer from opening its stores on Thanksgiving. Like Target (TGT +0.50%) and other chains, Wal-Mart is attempting to benefit from holiday-creep.
Yet as good as things were on the day, not every stock did well, and the three companies below managed to underperform the indexes and the retail leaders.
|
Company |
Change |
|---|---|
|
Solazyme (SZYM +0.00%) |
(2.7%) |
|
Zynga (ZNGA +0.00%) |
(2.5%) |
|
Workday (WDAY +0.66%) |
(2.2%) |
Now don't go running over the cliff with them like a bunch of lemmings: it could just be a temporary situation. Let's first see whether they had good reason to fall as panic-fueled routs can sometimes lead to excellent buying opportunities.
Alt lifestyles
As bearish as I am about Solazyme and the prospects for algae-based fuels, it's surprising nonetheless that the alt fuel specialist couldn't maintain the bounce it got after reporting earnings. Not that they were knock-your-socks-off results -- it lost $0.37 per share on a 4% drop in revenue -- but there are a few levers being pulled in its direction that should've propped it up.
California started pumping its environmentally friendlier fuel for the first time as part of a month-long test. It will at least prove the fuel is a viable alternative and certainly a better option perhaps than ethanol. Archer-Daniels Midland (ADM +0.94%) is one such company that produces the corn-made alt fuel, but it gets hung up on using feedstock for fuel, raising costs for everyone in the process. Solazyme's output isn't exactly cheap either, and some scientists question the environmental benefits of algae, saying in theory it ought to work out like that but no large-scale studies have actually proved that yet.
All of which is secondary to Solazyme's price action on Friday, since there was no news to speak of that should have kept its stock falling while the market's been rising. Let me know in the comments section below if you think algae-based fuels have a future.
I'm not one of them, and I've rated Solazyme to underperform the market indexes on Motley Fool CAPS, the 180,000-member investor community that translates informed opinion into stock ratings of one to five stars. So far the alt fuel specialist's stock is down 32% since I weighed in over a year ago compared to a 23% increase in the S&P 500, but its three-star CAPS rating suggests investors think it has a chance still.
All fun and games
Social gamer Zynga is another stock I've been bearish about, rating it to underperform the markets on CAPS back in May and watching its stock plummet 66%. It also had no news to speak of on Friday, but it's been witnessing a wholesale defection of executive talent. In the past few weeks, its CFO jumped ship for Facebook (FB 8.00%) and its VP of business development left. Over the past few months it has lost its COO, chief creative officer, and chief marketing officer. CEO Mark Pincus is vying for title of Worst CEO of the Year.
There doesn't appear to be anything working in Zynga's favor that suggests it can right its listing ship, and with top management going out to sea in lifeboats, there's little reason for investors to hang around, either. If you've got some idea as to how this can change, tell me in the comments box below.
Walking on sunshine
Cloud-based enterprise software provider Workday is eschewing the small- and medium-sized business model pursued by salesforce.com (CRM +2.00%) and instead is targeting the enterprise-level market currently home to Oracle (ORCL 2.25%) and SAP (SAP 0.85%). For a newly public company, it's a pretty ambitious direction to take, but analysts believe it can gain market share by offering better functionality at lower cost.
Of course, it means it will likely be posting sizable losses for a while, until the maintenance contracts start generating revenue, which means it's a risky play for investors. Too risky for me, and I've added it to my pool of stocks I've rated to underperform on CAPS, preferring instead to bet that Larry Ellison won't let Oracle slip further. Let me know below if you think Workday will be a runaway hit any day now.
