Among the biggest losers in Wednesday's early trading are
American Eagle (
AEO
)
,
USEC (
USU
)
and
Tivo (Nasdaq: TIVO)
.
|
Top Percentage Losers -- Wednesday, May 26,
2010
|
|
Company Name (Ticker)
|
Intra-Day Price
|
Intra-Day
% Loss
|
52-Week High
|
52-Week Low
|
American Eagle
(
AEO
) |
$13.52 |
-12.1%
|
$19.86 |
$12.56 |
| USEC (
USU
) |
$4.93 |
-6.3
%
|
$6.52 |
$3.22 |
| Tivo (Nasdaq: TIVO) |
$8.76 |
-
4.3%
|
$18.93 |
$6.41 |
|
*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 11:27AM Eastern Standard Time . Click on
ticker symbols for up-to-the-minute price quotes and
percentage gain data.
|
Teen Spending Under Pressure
We noted the poor quarterly results out of teen-focused retailer
Hot Topic (Nasdaq: HOTT)
, last week. Many teens are likely going to browse rather than buy
if forecasts of a lousy summer hiring season prove out.
American Eagle Outfitters (
AEO
)
issued quarterly guidance this morning that underscores the ongoing
struggles in this retail niche. The downbeat view is pushing shares
down more than -12% in Wednesday trading.
American Eagle notes that margin pressures should cause it to miss
second quarter earnings forecasts. "Margin pressures" is a
retailer's way of saying that heavy discounting will be needed to
move the merchandise and meet sales plans.
Pacific Sunwear (Nasdaq: PSUN)
also recently predicted that second-quarter results would be lower
than forecasts.
All three of these retailers also have to deal with a resurgent
Aeropostale (
ARO
)
, the only name in the group with real momentum. If teens are
spending anywhere right now, it's at Aeropostale. Yet despite a
nice move in shares, they still trade for just 10 times projected
2010 profits. That multiple is likely being restrained by overall
teen spending concerns.
Action to Take -->
Maybe the back-to-school season will hold better news for these
beleaguered retailers. There's no need to load up on their beaten
down shares right now. But Aeropostale, which has built up an
impressive multi-year track record, looks appealing due to a combo
of high growth and reasonable value. When investors rotate back
into retail stocks, this looks to be one of the better
performers.
-------------------------------------
Tivo Slumps Further
Adding insult to injury,
Tivo (Nasdaq: TIVO)
reported disappointing quarterly results after Tuesday's close,
just days after being dealt a legal setback. Sales in the first
fiscal quarter rose +11% from a year ago but are still not high
enough for the company to achieve profitability. The weak quarterly
results are pushing shares down another -4% in Wednesday trading.
The maker of its eponymously-named digital video recorders is being
squeezed from both ends. Other manufacturers are gaining market
share , and the company's strategy of securing royalties for its
technology is also not panning out. At least not yet. Management
predicts that the company will ultimately prevail in a lawsuit
against
Dish Networks (Nasdaq: DISH)
.
The lawsuit will go to trial later this year, and it's
make-or-break for the company, as it will set the tone for other
royalty relationships. If Tivo prevails, as management expects,
then shares could quickly move back into the upper teens, as was
the case in early March when the company initially appeared to be
in a strong legal position.
Action to Take -->
There's no need to bottom-fish shares here. Instead, you should
closely monitor legal developments this summer. If it increasingly
looks as if Tivo will prevail in its lawsuit, investors can make
solid gains in this name.
-------------------------------------
USEC: Opportunity in profit-taking
Shares of
USEC (
USU
)
are falling more than -6% in an otherwise robust market, as
momentum investors that piled into the stock Tuesday are rushing
out today. Good news had pushed shares up nearly +20% Tuesday, but
investors are often better off avoiding a very hot stock on an
intra-day basis. But today's sell-off is precisely when you should
be looking at a name like USEC. As we noted Tuesday, the company
secured a significant investment and looks set to post solid growth
in the coming years on the heels of an increasingly likely revival
for domestic nuclear power. Part of the problem is that USEC is not
heavily followed on the street, so shares were unable to receive
support from positive analyst chatter. But a lack of analyst
support may only be a matter of time as investment banks focus more
squarely on potential winners in the nuclear industry space.
Action to Take -->
USEC is expected to show big profit gains in coming years, and
today's sell-off makes the price-to-earnings ratio (P/E) even more
reasonable. Now that the dust has settled on Tuesday's momentum
trade, feel free to jump in.
-- David Sterman
Contributor
StreetAuthority
Disclosure: David Sterman does not own shares of any security
mentioned in this article.