The market has severely punished a number of well-known stocks for missing on earnings or providing disappointing guidance in the past several days. Every quarter, I watch for quality companies that see their stocks plunge during earnings season because they often provide major long term buying opportunities or a short term trading opportunity. This earnings season has offered several more opportunities to buy stocks that have been absolutely hammered by investors and shorts over their earnings and/or guidance. A major sell off could be a buying opportunity if it includes seeing very heavy volume, a big drop in valuation and a business model that remains solidly intact. Here's a number of companies that recently announced earnings and/or guidance that resulted in much lower stock prices.
Corning Incorporated (GLW
) shares are trading at $15.13. GLW makes a variety of products ranging from touch screen glass to fiber optics. The shares have traded in a range between $15.40 to $23.43 in the past 52 weeks. The 50-day moving average is $17.95 and the 200-day moving average is $19.53. Since the shares have been weak lately and are currently trading below the 50-day moving average, I would buy in stages so you can take advantage of any further dips. Earnings estimates for GLW are about $2 per share in 2011, so the PE ratio is less than 8 on these shares. GLW pays a dividend of 20 cents per year, which is equivalent to a 1.3% yield.
GLW shares dropped from around $18.50 in early July and now trade near a 52-week low at $15.40. The consumer demand for televisions appears to be weakening and that outlook has hurt GLW shares since earnings were released. However, this company has a lot going for it and demand for touch screen glass used in iPads (aapl) and other devices should continue to grow. With a PE ratio of less than 8 and a book value of $13.56, the sell off seems overdone.
Riverbed Technology (RVBD
) shares are trading at $27.79. Riverbed provides networking solutions for business. The shares currently trade below the 50-Day moving average of $35.81 and above the 200-Day moving average of $35.41. These shares have traded in a 52-week range between $15.68 and $44.70. Earnings estimates for RVBD are about 87 cents per share for 2011. This puts the PE ratio around 35.
RVBD shares fell off a cliff after earnings were reported. The stock was at about $39 and has dropped to the $28 level. This stock was priced for perfection before earnings and it is still overpriced at around 35 times earnings.
Akamai Technologies, Inc. (AKAM
) shares are trading at $23.03. AKAM is a leading Internet service company that helps accelerate and deliver website content. The 50-day moving average is $30.46 and the 200-day moving average is $40.61. Earnings estimates for AKAM are at $1.55 per share in 2011 and $1.74 for 2012.
Just days after reporting earnings, Akamai shares tumbled from about $30 and hit a new 52-week low of $23.53. AKAM has a a strong business model and lots of cash on the balance sheet, but after missing expectations more than once, investors are fed up. I would only average into a stock like this over time because it has not been able to find a bottom.
Vistaprint (VPRT) shares are trading at $28.21. Vistaprint offers printing services and products for business. The shares currently trade below the 50-day moving average of $46.08 and the 200-day moving average of $47.10. These shares have traded in a 52-week range between $26.26 and $56.25. Earnings estimates for VPRT are about 87 cents per share for 2011.
VPRT shares also fell off a cliff after earnings were reported. The stock was at about $45 and has dropped to the $27 level. This stock was priced for perfection before earnings and still looks expensive based on much lower growth for 2012.
Caterpillar (CAT) is trading at $97.18. These shares have a 52-week range of $63.34 and $116.55 The 50-day moving average is $102.93 and the 200-day moving average is $97.89. Estimates for CAT are about $7.19 per share in 2011 and $9.34 for 2012. Book value is stated at $20.75 per share.
This stock rose quickly before earnings were released and quickly sold off since when Caterpillar announced that the earthquake in Japan had impacted sales. For an industrial stock, and considering the weak global economy, there does not appear to be a lot of upside unless the stock dips further.