Please ensure Javascript is enabled for purposes of website accessibility

Why Joy Global, Inc. Shares Fell Nearly 21% in January

By Reuben Gregg Brewer - Feb 6, 2016 at 11:14AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The hits just keep coming at Joy Global, and there's no end in sight.

What: Joy Global's (JOY) stock price dropped nearly 21% last month, following an 18% drop in December. The shares were down more than 70% in 2015. It's been a tough slog, to say the least.

So what: The story hasn't changed at Joy Global: It is one of the largest manufacturers of mining equipment in the world, and the mining industry is struggling. So Joy and competitors like Caterpillar have been hard hit by an industrywide spending slowdown as miners retrench. The January decline is really just more of the same.

However, China remains a major influence on the market's perception of Joy Global, its competitors, and miners in general. Demand from a fast-growing China was the driving force behind the commodity boom that pushed miners to expand production. Now that China has started cooling off, there's a huge oversupply in most key commodities -- thus the slowdown in demand for mining equipment. But China's economy continues to show signs of weakness, which means the mining downturn, and the headwinds buffeting Joy Global, don't appear to be abating.

Now what: The mining downturn doesn't look like it's over, and Chinese growth remains a big trouble spot. Until supply and demand balance out, results at Joy and Caterpillar will likely be relatively weak. There will come a day when that changes, but right now it's hard to call the end to this commodity downturn. In other words, only contrarian investors should be looking at a company like Joy Global right now.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Joy Global Inc. Stock Quote
Joy Global Inc.
JOY

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.