The stock market can be very unforgiving at times. It's common to see how brutally the market can react when a company announces some bad news. Many stocks also plunge or surge during earnings season and we are in the midst of that right now. I always prepare my portfolio for buying opportunities during earnings season because it's often a great time to buy solid companies that are experienceing what may only be temporary setbacks. When a company misses earnings expectations by even a couple of pennies, or gives weak guidance, stocks often see totally exagerrated reactions. It makes sense to look for these opportunities because stocks that are oversold often rebound quickly, sometimes in just days. The best time to buy a stock that has dropped precipitously is a day or two after the bad news is announced. Very heavy volume can often be a sign that the stock is near a bottom or will be soon. The stocks below recently reported earnings and/or guidance that caused the shares to drop substantially. These stocks could rebound in the coming days and weeks:
Corning Incorporated (NYSE:GLW) shares are trading at $12.80. Corning manufactures specialty glass products, which range from touch screen glass to fiber optics. The shares have traded in a range between $11.51 to $23.43 in the past 52 weeks. The 50-day moving average is $13.80 and the 200-day moving average is $15.69. Earnings estimates for GLW are at $1.78 per share in 2011, and $1.68 for 2012, so the stock trades at about 8 times earnings, which is ridiculously cheap. The book value is $13.79 per share and this company has a very strong balance sheet. Corning even pays a dividend of 30 cents per year, which is equivalent to 2.1%. Corning is seeing strong demand for its "Gorrilla Glass" from tablet and mobile phone makers like Apple (NASDAQ:AAPL), but the demand from the television manufacturers has been impacted by excess capacity and that is hurting profit margins. When Corning reported earnings, the stock dropped about 10% and it now trades below book value. Weak demand from Europe and in the television market may persist for awhile, but the stock is just way too cheap for investors who think long-term. It makes sense to buy this dip and any further weakness.
Wellpoint, Inc. (WLP) shares are trading at $64.35. This company provides insurance and health benefit programs, which include managed care plans, preferred provider organizations, health maintenance organizations, pharmacy benefit management, dental and more. The shares have traded in a range between $56.61 to $81.92 in the past 52 weeks. The 50-day moving average is $68.09 and the 200-day moving average is $69.43. Wellpoint pays a dividend of $1 per share, which gives a yield of 1.4%. Earnings estimates are at $7.10 per share in 2011, and $7.75 in 2012. Wellpoint shares dropped about 7% after releasing earnings, which saw a 39% drop in Q4 profits. A high number of claims raised expenses for Wellpoint, but the company expects better reuslts in 2012. Dips to about $65 are likely to be good buying opportunities.
Zions Bancorporation (NASDAQ:ZION) shares are trading at $16.60. Zions is a Utah-based regional bank that provides many products and services including credit cards, mortgages, home equity lines of credit, checking accounts, and more to both consumers and businesses. The 50-day moving average is $16.50 and the 200-day moving average is $19.20. Earnings estimates for ZION are $1.48 per share in 2011, and $1.83 in 2012. The 52-week range is $13.18 to $25.60. This company pays a dividend of 4 cents per share, which gives a yield of .2%. Zions reported earnings that disappointed investors. The stock dropped from about $19 to around $16.60 when earnings came in at 24 cents rather than the 33 cents estimate. This looks like a trading opportunity for investors willing to buy the dip and sell into rallies.
Monster Worldwide, Inc. (NYSE:MWW) shares are trading at $7.41. This company operates a number of websites for employment. The sites enable employers to post jobs and for employees to post resumes. The 50-day moving average is about $7.93 and the 200-day moving average is about $10.77. The 52-week range is $6.34 to $21.62. Earnings estimates for Monster are 39 cents per share in 2011, and 53 cents for 2012. Monster reported weak results that were impacted by competitive pressures and other factors. The company announced it would layoff about 400 employees and the stock dropped considerably on the news. This stock appears to be better for traders who buy on dips and sell on rallies, rather than a buy and hold investment. For investors willing to wait for a real turnaround in the job market the shares look cheap and trade below the $9.73 book value.
Data sourced from Yahoo Finance and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclaimer: Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.
Disclosure: I am long WLP, GLW.