It is not uncommon for a stock that has recently hit a 52-week low to sink to a new low shortly thereafter. After all, some investors may become discouraged by the share price and jettison the stock, thereby placing even more pressure on the shares. In other cases, perhaps a fundamental reason for the stock's poor performance can exist. In other words, a stock also can be punished when a company loses a large client or reports a bad earnings period - events which may serve as a harbinger of tougher times ahead.
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With that in mind, let's review a few stocks that recently fell to a 52-week low. The stocks listed below are poised to possibly move lower and, therefore, pop up on the radar of short sellers eventually. Thus, closer inspection is warranted.
|
Company
|
Market Cap
|
| Barclays (NYSE:BCS) |
$9.9 billion
|
| Elizabeth Arden (Nasdaq:RDEN) |
$186.4 million
|
| Fossil (Nasdaq:FOSL) |
$881.3 million
|
| Heinz (NYSE:HNZ) |
$11.6 billion
|
| Zale Corporation (NYSE:ZLC) |
$40.2 million
|
| Data as of January 28, 2009 |
Tarnished Jewels
When the economy was humming, people didn't think twice about opening their wallets to drop money on big ticket items like jewelry. But the world has changed over the last few months and consumers now watch their spending closer than ever. Unfortunately, the trend has affected jewelry-maker Fossil, too.
The company is coming off of a relatively solid third quarter in which it posted an increase in sales of more than 14% and a 25-cent jump in earning per share. However, the earnings report also stated that the company is looking for Q4 earnings of 70 cents per share, which is a bit of a letdown based on analyst projections of 73 cents. Worse still is the fact that the EPS of 70 cents falls significantly lower than the company's previous guidance of 94 cents to 97 cents per share.
On January 23, Fossil stock fell from the $15 level to a new 52-week low of $11.51. Although the drop in stock price is not a guarantee of a future decline, it is a strong possibility. In the earnings press release, Fossil CFO Mike Kovar said, "Since the end of the third quarter, business conditions have grown more challenging. Global economies have weakened, but even more significant to our business model, is that the U.S. dollar has strengthened appreciably against most other currencies."
Other major jewelry-selling retailers like J.C. Penney (NYSE:JCP) and Nordstrom (NYSE: JWN) also are coming off of difficult third quarters. Meanwhile, Zales (NYSE:ZLC) saw its same-store sales decline by 22% in December. Because the downward trend runs throughout the retail sector, the sales trends of other retailers could provide potential clues into Fossil's future trajectory. And all signs point to a dismal 2009 for Fossil.
Bottom Line
A stock trading in the doldrums may be there for a reason. Companies like Fossil that have fallen to new lows require deeper research.
