Among the biggest losers in Monday's early trading are
Dreamworks Animation SKG (
DWA
)
,
Popular (Nasdaq: BPOP)
and
New York & Co. (
NWY
)
.
|
Top Percentage Losers -- Monday, May 24,
2010
|
|
Company Name (Ticker)
|
Intra-Day Price
|
Intra-Day
% Loss
|
52-Week High
|
52-Week Low
|
| Dreamworks (
DWA
) |
$30.81 |
-11.6%
|
$44.77 |
$25.70 |
| Popular (Nasdaq:
BPOP) |
$2.94 |
-4.0%
|
$4.23 |
$1.00 |
New York & Co.
(
NWY
) |
$3.75 |
-2.6%
|
$6.53 |
$2.72 |
| *Table
includes companies with minimum market capitalizations of
$200 million and three month trading volumes of at least
100,000 shares. All percentage returns are listed as of
11:00AM Eastern Standard Time. Click on ticker symbols for
up-to-the-minute price quotes and percentage gain data. |
Disappointing Shrek Opening weighs on Dreamworks
Shares of
Dreamworks Animation (
DWA
)
are off by more than -11% after
Shrek Forever After
generated $71 million at the box office this weekend - below
industry forecasts of $85 million, and a weaker opening than the
prior two films in the franchise. Accounting for higher ticket
prices in place compared with the last version of the Shrek
franchise, actual attendance is more than 50% below the prior
effort, highlighting the fact that the animated series has likely
run its course.
Then again, we are going into the Memorial Day weekend, so next
weekend's box office number should still look pretty good. And
Dreamworks' still has an ample slate of animated films on the
docket including sequels to
Kung Fu Panda
,
Madagascar
and
How to Train Your Dragon
. Puss 'n Boots, a character spin-off from the Shrek series, will
get its own feature film in 2011, setting up yet another franchise.
For investors in this entertainment company, there are two key
issues. First, the annual output of animated films is rising from
an average 2.5 films to three new films per year, which could yield
good operating leverage , as long as those other franchises don't
show audience fatigue too quickly. And will decisions by major
movie theatre chains to sharply boost prices kill traffic? That was
a key factor behind the steady sell-off at
Carmike Cinemas (Nasdaq: CKEC)
before a Friday rebound.
Right now, analysts think Dreamworks' growth in earnings per share
is likely to stall out in the $2.50 to $2.90 range over the next
three years. After Monday's sell-off, shares trade for about 11
times the mid-point of that range. That's a reasonable price. Then
again, this morning's pullback puts the stock right back in the $30
area, where it has traded for much of the last five years.
Action to Take -->
Shares look intriguing as a very short-term play, as the Memorial
Day weekend box office receipts for
Shrek Forever After
could provide some upside. But beyond that, a lack of near-term
catalysts makes this a stock to watch rather than buy.
------------------------------------
Popular Spooks Investors
Shares of
Popular (Nasdaq: BPOP)
, a Puerto-Rico based bank that also serves the U.S. Hispanic
market, are off -6% this morning as investors wait for another shoe
to drop. The bank just issued a terse announcement that its
president is no longer with the company. Without any reasons given,
investors must assume the worst. In these instances, it is always
prudent to shoot first and ask questions later. Popular operates in
the heavily-regulated banking industry, and you can expect a high
degree of scrutiny from watchdogs after this morning's
announcement.
But the ink is still wet on a deal that will enable Popular to
boost market share in Puerto Rico. Early this month, Popular
assumed control of the assets of bankrupt Westernbank Puerto Rico,
which should boost its already dominant 27% market share of the
island's banking activity closer to 40%.
So although this morning's announcement is quite concerning, shares
are likely to represent real value -once the key questions around
the executive departure have been answered.
Action to Take -->
Wait to find out why the bank's president was hastily removed. If
the impact does not appear to onerous, be prepared to pounce on
what is now a very cheap bank stock. But also know that patience
will be required, as the Puerto Rican economy is mired in a slump
that could last into 2011. This could be a great long-term pick,
with lots of short-term noise.
------------------------------------
Selling Continues in Retailer New York & Co.
Shares of
New York & Co. (
NWY
)
are off another -2.5% on Monday, and have now fallen for five
straight sessions. In that time, the retailer's stock has lost more
than one-third of its value. Management has been working to turn
the ship around by improving its website, and updating its product
styling while making sure that inventory wasn't too lean -- a long
standing issue. Shares rose steadily in April on hopes that
quarterly results would strengthen, but last week's tepid earnings
report dampened hopes.
Yet the quarterly report had some clear positives: same-store sales
grew +2.9% in the fiscal first quarter, the first positive showing
in six quarters; online sales grew +33% from a year ago; and a
planned increase in outlet stores should minimize the need to
heavily discount goods at its core stores. Moreover, shares now
trade at just 1.1 times tangible book value and around 25% of
sales. That's quite low for a retailer.
Action to Take -->
Shares are likely to tread water at new lower levels, but
value-oriented investors are likely to start noticing this stock on
their screens. The turnaround will take some time, and shares would
double if management hits its long-term targets. Shares have likely
hit bottom on Monday's weakness, and though patience is required,
the (long-term) reward outweighs the risks.
-- David Sterman
Contributor
StreetAuthority
Disclosure: David Sterman does not own shares of any security
mentioned in this article.