By Louis Bedigian
These stocks are downright scary.
It's that time of the year again. A time when grown men and women dress up as their favorite film, TV and video game characters, all in the name of partying on a holiday that was once reserved for candy-seeking children. Of course, I've never felt that it was strictly for kids – in fact, I don't even need Halloween to dress up as my favorite game character.
Whatever your desires are this Halloween, there's no denying that this has been one horrifying year for select tech stocks – especially those that were once thought to be impervious. Investors have found a degree of stability in Apple (AAPL), but with other big players fluctuating – including Microsoft (MSFT) and Google (GOOG) – it's becoming increasingly difficult to pinpoint the next big thing in technology companies. Even newer trades – such as LinkedIn (LNKD), which proved to be a stronger trade than its critics expected – are having a roller coaster year.
But they can't compare to these five big tech stocks, which are so horrifying they just might have what it takes to frighten the likes of Freddy Krueger and Jason Voorhees.
Most Americans find it hard to believe that Nokia (NOK) is still one of the biggest players in smartphone manufacturing. But with a robust international business, Nokia has been able to survive at a time when Apple and Samsung are taking over.
Nokia has also had a lot of flops, a lot of takeover rumors, and countless announcements that don't make any sense. Nokia's promotional videos arenowhere near the hype-raising quality of Apple. So what are investors to do? Embrace this horror film with popcorn in hand, waiting patiently for the company to kill off each and every product it makes?
With a $4 drop in its share price since February, Nokia's decline has been fairly significant.
Think that Nokia is going to pull through? Were you impressed with the newly announced Lumia 800? If so, here's a trade to consider:
- Microsoft (MSFT) is becoming the official OS maker for Nokia. Forget about the N9 – it's dead in the water. Going forward, Nokia is all about Windows Phone 7.
If you're not too sure about Nokia's future, you might want to steer clear of Windows Phone 7 and consider these obvious alternatives:
- iOS and Android are clearly the way of the future (“the future” meaning the next 12 months). Thus, Apple and Google will continue to be strong players in this market.
- If Google decides to take full advantage of its latest acquisition, Motorola (MMI) could prove to be a key component as well.
Remember the good-old-days when Cisco (CSCO) was a strong, remarkable company that made successful products, turned a nice profit, and was generally a great buy? Those days are long gone. While Cisco isn't about to go under, the company recognized that it was running itself into the ground, thus the internal restructuring that led to the demise of Flip Video. Cisco, like so many tech companies who prematurely jumped into an acquisition deal, paid a pretty penny (a reported $590 million) to acquire Flip's maker, Pure Digital.
But never mind the waste of money. Investors ran because they weren't happy with Cisco's results. From a 2011 high of $22.05 on February 4 to a low of $13.73 on August 10, Cisco has been all over the place this year. The stock currently trades in the $18 range.
If you believe in Cisco's future, you may want to consider the following trades:
- Suppliers like Atmel Corporation (ATML), Diodes Incorporated (DIOD), Marvell Technology (MRVL) and NetLogic Microsystems (NETL) rely heavily on companies like Cisco, so you might want to keep an eye on them.
On the other hand, if you don't think Cisco can improve its business, you might want to examine this alternative:
- Competitors like Juniper Networks (JNPR) and F5 Networks (FFIV) are more than happy to fill any void left by Cisco.
THQ (THQI) hasn't been doing well these days. Slipping sales, disappointing releases, and low critical scores have brought about a new era of fear that investors can't seem to shake. THQ's price has gone from a respectable (if not painfully low) price of $6.41 on February 2 to a five-year low of $1.52 on October 5. The company currently trades in the $2.30 range.
Can THQ recover? That's hard to say. The ailing games publisher has released some wonderful products over the past few years, including the heavily underrated Deadly Creatures. But if the company isn't able to turn a profit on those games, then it has a serious problem.
Investors who still have faith in THQ may want to consider the following trading ideas:
- If successful, THQ's performance can only help the companies it makes games for, which include Sony (SNE), Microsoft, Apple, Nintendo (OTC:NTDOY), and the soon-to-be-traded social networking giant, Facebook.
Think THQ is in the toilet but love the idea of investing in video game stocks? Then consider these two other corporations instead:
- With growing franchises like Battlefield, staples like Madden and FIFA, and a plethora of games that have sold or have the potential to sell more than one million copies each, Electronic Arts (ERTS) is easily one of the most important companies in the game industry.
- Activision (ATVI) is also very important, primarily due to the massive Call of Duty franchise. Bear in mind, however, that Activision has also killed off several of its biggest franchises (such as Tony Hawk and Guitar Hero) by over-saturating the market with several low-quality sequels.
Research In Motion
From a YTD high of $69.69 on February 16 to a 12-month low of $20.30 on September 30, Research In Motion (RIMM) is one scary company. BlackBerry continues to lose market share to iOS and Android, PlayBook flopped, and nothing in the company's portfolio has given investors any indication that it could recover.
For the sake of the smartphone industry, I do not want to see Research In Motion go under. But at this point, I'm not sure the company can avoid failure – or worse, a takeover. Two weeks ago the company engraged its most loyal customers with an outage that made the BlackBerry all but useless. At the same time, many BlackBerry users are trading in their old phones for an iPhone 4S.
If RIMM can't make up for its BlackBerry decline, what will it do? The company is known almost entirely as the creator of the BlackBerry. Without it, can RIMM even exist?
Does Research In Motion have the right PlayBook to grow a fruitful BlackBerry tree of success? If you think so, then this trading idea might be worth a look:
- Jabil Circuit (JBL) and Qualcomm (QCOM) are two of RIMM's biggest suppliers. Their success is closely tied to the success of companies like Research In Motion.
If, however, you're one of the investors that dropped your BlackBerry for an iPhone 4S, then you already know where to turn…
- Apple and Google are the leaders of the industry. ‘Nuff said.
The mother of all monstrous tech stocks, Netflix (NFLX) is no longer Blockbuster's worst nightmare. In fact, Blockbuster execs are probably celebrating right now, no doubt with a bittersweet glass of champagne. While it must be fun for video rental stores to watch their killer fall like Michael Myers at the end of Halloween, they can't celebrate without thinking about how things might have turned out if Netflix had fallen sooner.
Since the price hike was announced this summer, Netflix stock has gone from nearly $300 to roughly $80. The loss of Starz and the life and death of Qwikster made it hard for investors to trust Netflix. The latter move helped improve the stock, as some believed that the company may finally be able to turn itself around. But with a customer decline of 800,000 users and the potential for greater losses in 2012, it's hard to have much faith in Netflix's future.
Despite Netflix's many missteps, it still has quite a few fans, as well as several investors who are interested in the stock. If you're one of them, you might want to take a gander at the following corporation:
- Netflix may be the only company people think of when they log into the service, but L-3 Communications (LLL) is the one physically delivering movies and TV shows to Web customers. L-3 could reap massive benefits from a Netflix boom.
If Netflix isn't your bag, however, then you might want to look at this corporation instead:
- Amazon's (AMZN) video collection is growing like wildfire – which, not coincidentally, is just in time for the launch of the Kindle Fire.
Disclaimer: Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.