Seeking Alpha
Contrarian, event-driven, tech, oil & gas
Profile| Send Message|
( followers)

With the second quarter of the year at a close, the Nasdaq exchange and the S&P 500 snapped back last week by over 2.5% and 3% respectively. Its strength was not followed by some of the companies trading well-below their 52-week highs. At the other end of the spectrum, the winners in the first-half of 2012 paid regular dividends and generated consistent revenue. Exxon Mobil (NYSE:XOM), China Mobile (NYSE:CHL), Pfizer (NYSE:PFE), and Visa (NYSE:V) were some of the companies that closed within 5% of their 52-week highs. For investors interested in seeking bargains, companies trading at well-below their 52-week highs and trailing the market are worth evaluating as possible buying opportunities.

In the technology sector, companies continuing a downward trend are:

Company

From 52w High

First Solar

-89.41%

Netflix, Inc.

-77.53%

Zynga

-65.81%

Below is a brief analysis of ideas for further research.

First Solar (NASDAQ:FSLR) continued its descent since reporting results in May 2012, eventually finding a bottom in early-June at $11.43. The company is transitioning its business away from subsidized markets and is integrating large-scale solar power generation onto the transmission grid. The company anticipates that demand would increase if the solar cost was between $0.10 and $0.14 per kilowatt hour. First Solar is cutting costs to achieve a $1.15 to $1.20 per watt in costs by 2016. Investors traded shares up 31.76% from its 52-week low, despite the company reporting a first quarter loss of $5.20 after charges. First Solar had $750 million in cash, but its debt increased by $201 million last quarter.

Investors were encouraged by a report that First Solar will be continuing to build a 230-megawatt power plant in Los Angeles. Shares remain a speculative company to buy. A glut in solar is expected to continue. When LDK Solar (NYSE:LDK) reported, the company expected overcapacity and margin erosion to continue.

Netflix, Inc. (NASDAQ:NFLX) is down 77.53% from its 52-week high and is one of the worst-performing stocks on the S&P 500 for the second quarter. Netflix is also a company in transition, as it shifts its focus from DVD to digital delivery. To reduce costs, the company is shifting its content delivery from third-party providers to its own delivery network, called "Open Connect."

Netflix is also expanding its operations worldwide, but its risks are already reflected in the price of its shares. Netflix also continues to add more content such as Modern Family, Lie to Me, and Arrested Development. Growth in tablets is expected to continue, which will benefit Netflix. ComScore also found that 53% of tablet owners watch videos from sites like YouTube and Netflix. With video demand in an early growth phase on mobile devices, Netflix will benefit from this trend. Netflix is now a long-term buy.

Zynga (NASDAQ:ZNGA) is down 65.81% from its 52-week high. Zynga shares were dragged downward by the poor performance of Facebook shares post-IPO. Investors in Zynga will also be watching Facebook's earnings closely. Over 92% of Zynga's revenue comes from Facebook.

Most recently, Zynga announced a new network called "Zynga with Friends" in an effort to reduce its reliance with Facebook. The company also announced a number of new games: Matching with Friends, The Ville, Zynga Elite Slots, ChefVille, Ruby Blast, and FarmVille 2. Only The Ville and Matching with Friends are titles of importance: they are mobile games. Zynga will continue to grow revenue from the mobile channels as it lessens its reliance on Facebook. Investors continue to ignore the value of Zynga in mobile, which now makes Zynga a stock to consider buying.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 3 Promising Buys In Technology Down Significantly From Their 52-Week High