A Review of Recent Tech Stock Implosions
34 comments | March 19, 2011 | about: AAPL, AMZN, FFIV, FNSR, GOOG, JDSU
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Some of tech's highest flyers have fallen on hard times, as of late. Investors struggle with the standard quandary: Are these stocks bargains or do they have further to fall? The following stocks sit among tech's worst performers in recent weeks.
F5 Networks (FFIV). Investors have just decimated shares of F5. Who can forget the company's recent earnings miss that sent the stock from its 52-week high of $145.76 on January 13th to a close of $109.15 on January 20th, the day after the dismal report? After rebounding a bit, FFIV has fallen on hard times, closing at $96.92 on Friday. As Seeking Alpha contributor TraderMark notes, the hit to the shares has lowered F5's valuation considerably and the street certainly has expectations set low for the company's next earnings report, due April 20th. I'd wait for a convincing break to the upside before playing FFIV for a short- or long-term bounce.
Finisar (FNSR). On February 14th, FNSR hit its 52-week high of $46.09. It took a breather before scratching back to an intraday high of $44.07 on March 4th. On Friday, it closed at $21.14. According to Yahoo Finance, insiders have been unloading the stock all month, including several non-open market sales at $40.04 the day before an earnings miss that clobbered the stock, knocking it back 37 percent in after-hours trading.
JDS Uniphase (JDSU). Finisar took JDSU down with it. After an impressive earnings report in February, investors marveled at JDSU's breakout run. The stock powered to 52-week high after 52-week high, topping out at $29.12 on February 14th. That run is history. JDSU closed the day Friday at $18.93.
Apple (AAPL). Apple's near-month long tanking has been nothing short of bizarre. On February 16th, AAPL hit a 52-week high of $364.90. From there, it's been pretty much downhill. AAPL touched an intraday low of $330.00 on Friday, before closing at $330.67. Over the last few weeks, AAPL has essentially down very little on good news (Steve Jobs breaks bread with the president), while plummeting on unsubstantiated rumor (Steve Jobs as six months to live). Despite the potential for short-term noise and hack attacks, Apple, rolling on all cylinders with out of this world demand for its new iPad 2, remains the bargain of the century at these depressed levels.
Amazon.com (AMZN). Yet another tech stock that has shed more than 10 percent over the course of the last month. AMZN hit its 52-week of $191.60 back in January. On February 14th, it retraced close to that mark, touching an intraday high of $191.40. On Friday, Amazon.com shares ended the day at $161.82. Amazon has had to deal with analyst concern over a revelation from its last earnings call. The company said it will increase capital expenditures, which might pressure the bottom line. Personally, I think it's a good sign when a business like Amazon needs to build out infrastructure and the like to meet growing consumer demand.
Google (GOOG). If nothing else, it's fun to play with big numbers. On January 19th, GOOG touched its 52-week high of $642.96. A month later, the shares dropped to $610.21. On Friday, they closed at $561.06. As far as I know, Google's story has not changed, but its valuation looks attractive. As of Friday, it trades at a forward P/E of just 14.
There's good reason to think that buying these six stocks now could bring serious rewards later. Consider where you would stand, as of Friday's close, had you invested $10,000 in each of these stocks one year ago. And, remember, these figures include the drubbing each stock has taken over the last month and in a few cases, for much of the year.
$10,000 Investments in FFIV, FNSR, JDSU, AAPL, AMZN & GOOG, Year-to-Year
Company (Ticker) Value, 3/18/2011 % Change
F5 Networks (FFIV) $15,071 50.71
Finisar (FNSR) $13,754 37.54
JDSU (JDSU) $16,797 67.97
Apple (AAPL) $14,719 47.19
Amazon.com (AMZN) $12,189 21.89
Google (GOOG) $9,906 (0.94)
Taken together, this $60,000 investment made one year ago would have grown to $82,436, as of this past Friday. As the mutual funds always say, Past performance is not necessarily indicative of future results, but it's at least another point to consider as you ponder whether or not to buy when everybody else seems to be selling.
Disclosure: I am long AAPL.
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