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Why ConocoPhillips, Fitbit, and Generac Holdings Slumped Today

By Dan Caplinger - Jan 25, 2016 at 5:47PM

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The stock market gave up its gains from last week, and these stocks stood out with excessive losses. Find out why.

Image: ConocoPhillips.

Last week's enthusiasm on Wall Street proved to be short-lived, and a late-day drop sent the Dow Jones Industrials to a loss of more than 200 points. After a big jump, oil prices resumed their decline, falling more than $2 to fall below the $30 per barrel mark once again. Those declines sent many energy-related stocks down sharply, but concerns about the results of the current earnings season also weighed on the broader market. Among some notably poor performers on Monday were ConocoPhillips (COP 2.01%), Fitbit (FIT), and Generac Holdings (GNRC -3.12%).

ConocoPhillips fell 9% as investors had to deal not only with the decline in crude oil but also oil's potential impact on the stock's ability to sustain its dividend. The oil giant is currently yielding nearly 8%, but analysts at Barclays believe that the odds of ConocoPhillips' being able to keep paying its current quarterly dividend are less than 50%. The question that investors have to answer is whether accepting a cut in the dividend is worth it to allow ConocoPhillips to use its cash to pursue potentially lucrative opportunities. In an environment in which many companies are looking at forced sales of oil and natural gas assets to stay afloat, it's entirely possible that ConocoPhillips would be able to utilize capital more effectively than simply returning it to shareholders. For now, though, dividend investors aren't happy about the prospect.

Fitbit dropped 8% after analysts at RBC Capital reduced their price target on shares of the fitness-device specialist by $5 per share to $28. The company maintained its outperform rating on the stock, arguing that it has a good opportunity to keep growing and retain leadership in the niche industry. By taking advantage of its network effects, Fitbit could rebound in the long run, but first it will have to establish that it can survive a competitive onslaught not only from fellow specialists in the fitness space but also from tech giants looking to offer a wider range of features on their existing multipurpose devices. If the company's new Fitbit Blaze becomes more popular than initially thought, then that could be the catalyst that helps Fitbit regain positive momentum despite the downgrade.

Finally, Generac Holdings slumped 11%, giving up most of the backup power-generator manufacturer's gains from last week. The snowstorm that paralyzed much of the mid-Atlantic region over the weekend had a serious impact on tens of millions of residents, but the number of power outages was relatively low in most areas. That's bad news for Generac, which tends to see demand for its generators soar after long outages over widespread areas. With the winter season having been relatively tame in the eastern half of the U.S. until the current storm, Generac will need to see more tough weather to match the performance it has enjoyed in harsher winters in past years.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Generac Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

ConocoPhillips Stock Quote
$95.51 (2.01%) $1.88
Generac Holdings Inc. Stock Quote
Generac Holdings Inc.
$244.20 (-3.12%) $-7.86
Fitbit, Inc. Stock Quote
Fitbit, Inc.

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