Among the biggest losers in Thursday's early trading are
Coldwater Creek (Nasdaq: CWTR)
,
Parexel (Nasdaq: PRXL)
and
Walter Energy (
WLT
)
.
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|
Top Percentage Losers -- Thursday, June 3,
2010
|
|
Company Name (Ticker)
|
Intra-Day Price
|
Intra-Day
% Loss
|
52-Week High
|
52-Week Low
|
| Coldwater Creek (Nasdaq: CWTR) |
$5.24 |
-11.8
%
|
$9.20 |
$4.14 |
| Parexel (Nasdaq:
PRXL) |
$21.44 |
-9.0%
|
$25.64 |
$11.04 |
| Walter Energy (
WLT
) |
$71.20 |
-4.8
%
|
$99.45 |
$29.02 |
|
*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 10:53AM Eastern Standard Time . Click on
ticker symbols for up-to-the-minute price quotes and
percentage gain data.
|
Retail: Excuses to Sell
Executives at
Coldwater Creek (Nasdaq: CWTR)
would like you to notice that the women's apparel vendor posted a
surprise first-quarter profit. But investors are focusing on the
fact that the fiscal second quarter is off to a slow start, which
will force the retailer into markdowns. That will crimp profit
margins and lead to a quarterly loss. That's pushing shares down
roughly -12% on Thursday, not far from the 52-week low. A +32%
spike in inventories is also causing concern, which management
intends to clear out in the company's annual June summer sales
event.
Action to Take -->
Shares are fairly cheap at just 0.4 times projected fiscal 2011
sales, while rivals such as
Chico's FAS (
CHS
)
and
Ann Taylor (
ANN
)
trade closer to 0.7 times sales. But the sales concerns will take
time to resolve, as the company is seeking a new head of
merchandising to rejuvenate the product line. New merchandising
teams need plenty of time to order new fashions. So it will be a
year or more before shoppers can sense whether Coldwater Creek's
fashions are back on track. Deep value investors should give the
stock a close look, as shares have likely found a floor here. But
major gains in the stock may be a number of quarters out.
-------------------------------------
A Bad Bet on Parexel
Investors circled today's date on their calendars, noting that
Parexel (Nasdaq: PRXL)
, which provides clinical research services to drug companies,
would be issuing fresh guidance for 2011. They bid shares up around
+5% Wednesday anticipating that the company's guidance would be
above current consensus estimates. Instead, management simply met
expectations, and those investors trying to score a quick hit are
dumping the stock today, pushing it down -9%.
But for investors focused on the longer-term, Parexel should be on
your radar. The Contract Research Organization (
CRO
) is one of the largest in the industry, and has been using that
scale to offer clients a wider range of services. This enables the
company to wrest contracts away from smaller rivals. Moreover, the
entire CRO industry is growing at a nice clip, as more large drug
companies are realizing that it is more cost-effective to outsource
clinical trials. In the first quarter, the six largest
publicly-traded CROs booked more orders than actual billings, which
was the first positive book-to-bill ratio in a number of quarters,
according to analysts.
Action to Take -->
Parexel is an appealing health care play as a broad proxy for all
of the drug trials underway. But whereas biotechs offer huge reward
and huge risk, Parexel offers much lower risk but also less upside.
Shares should eventually work back to the upper $20s as earnings
multiples come in line with historical norms.
-------------------------------------
Early Preview of Obama's Climate Plans
We'll be taking a closer look at the potential winners and losers
from President Obama's renewed push for clean energy, but it's
clear that coal stocks will be under pressure. This morning, shares
of
Walter Energy (
WLT
)
are off roughly -4% as investors start to re-jigger their
portfolios. Walter Energy mines high-grade coal that is used at
steel plants. Shares had already been weakening in recent months on
concerns that the Chinese steel sector was set to cool off.
Potentially crimping demand for Walters. Another negative: natural
gas, which can be used as an alternative energy source, remains
very cheap and burns cleaner.
Action to Take -->
The continued sell-off puts shares deep into value territory,
trading at around 6.5 times next year's profit forecasts, and close
to four times earnings before interest, tax, depreciation and
amortization (EBITDA). In addition, global demand for steel may
hold up better than many expect, as production of autos and
appliances, and eventually commercial construction, should prove to
be key drivers of economic growth. Wait for clarity on the Obama
administration's climate initiatives, to be sure that the headlines
don't cause further weakness, but be ready to pounce. Some analysts
predict that shares will eventually trade back up to five or six
times projected EBITDA , which would push shares right back up to
the 52-week high of around $100 - +40% above current levels.
-- David Sterman
Staff Writer
StreetAuthority
Disclosure: David Sterman does not own shares of any security
mentioned in this article.