These three companies just didn't live up to Mr. Market's expectations last week. Sometimes an earnings stumble is a signal to sell, but digging in the dirt is also a good way to find turnaround candidates while they're getting beaten down.
Today, I've got a tale of two retailers and a tech stock. I'll give you the details on each, but I'll also point you toward some great alternatives to all three of these disappointment factories.
It's all fun and games, until ...
Let's start in your living room. Video game retailer GameStop
GameStop shocked the Street with earnings of just $0.23 per share, far below the analyst consensus of $0.28 per share. Part of the shortfall could be explained away with a weaker slate of new game titles, as last year's second quarter included the blockbuster Grand Theft Auto 4 from Take-Two Interactive
So what do you do if you're stuck with stock in this weak retailer? My comrade in Foolish arms Rick Munarriz knows three similar stocks to GameStop that he still believes would treat your portfolio much better. I own one of them, and would agree that the other two look really solid. You owe yourself to have a look at Rick's suggestions, Fool.
Are these wafers fresh?
Next up, turn your eyes to the sky, because this underperformer is powered by the sun.
Solar power player LDK Solar
This time, LDK reported a $2.03 loss per American depositary share (ADS), way worse than the expected $0.91 loss per ADS. Over the last year, LDK shareholders have seen the stock's value shrink by more than 80%.
Is this a superball stock, set to rebound in a big way from these depressed price levels? I'm not so sure. Price wars have a way of sticking around longer than you'd think. If I were a solar power investor today, I'd take a long, hard look at the panel makers instead and leave the wafer industry behind until product prices start to stabilize.
Home so soon, dear?
The last of our errant earners today should look familiar. Home improvement warehouse chain Lowe's
You'd expect Lowe's to suffer under a weak economy with special emphasis on weak home sales. But then you'd have to assume that arch rival Home Depot
Lowe's saw profits swoon by 20% compared to the year-ago period, but Home Depot held up better with just a 6% drop. Lowe's also fared worse in terms of same-store sales.
I find it hard recommending either Lowe's or Home Depot for your portfolio today. The only reason to invest in these giant retailers would be if you're looking for rock-steady dividend income and a stable share price. But the dividend yields aren't all that great, and neither stock has delivered on the "stable pricing" front, either. Our Income Investor team can show you lots of other stocks that should fit the bill much better.
See you next week!
Some of these underperformers are victims of larger circumstances, while others might have only themselves to blame. It's up to you to decide which down-on-their-luck companies should be able to pull themselves up by the bootstraps, and which ones are stuck in the mud for real.
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Suntech Power and Take-Two Interactive are Motley Fool Rule Breakers recommendations. GameStop is a Motley Fool Stock Advisor pick. Home Depot and Lowe's are Motley Fool Inside Value picks. Try any of our Foolish newsletters today, free for 30 days.
Fool contributor Anders Bylund owns a few shares in Take-Two Interactive, but he holds no other position in the companies discussed this week. The Fool has an ironclad disclosure policy, and you can see Anders' current holdings for yourself.