Bear of the Day: Titan (TITN) - Bear of the Day
2013年4月26日 - 9:31AM
Zacks
Bear TITN 042513
It’s often said
that logic can lead you down the right path in life. When the
right choice seems to be right there in front of you, it’s hard to
take another path.
Shares of
Titan Machinery TITN
recently dropped from $32 to $22 after the company reported and are
now looking attractive to some investors (perhaps a logical
choice), but I wanted to check that logic and make sure that we are
all on the same page.
My colleague
wrote about Titan just a week or so ago and did an great jobs at
offering the facts. My goal is to address some of the nuances
and psychology that goes into buying stocks on weakness and why it
might not always be the best thing to do (even if it seems like a
great deal).
Tracey discussed
how some traders thought TITN might be a good long term buy and
perhaps shorter term traders might be better off with a stock like
CNH Global CNH.
But for you
longer term players, the question you need to ask yourself is not
just how long you are willing to wait, but how much pain will you
endure before you bail on your investment.
The Psychology of a Selloff
We all have different time horizons and goals when it comes to
investing. Some look for a quick pop over a week, others are
committed to years in a stock (not so much anymore).
When stocks like
Titan go through a poor earnings report and offer poor guidance,
shares can often get hit hard. Then usually you’ll see what
we pro traders call a dead-cat bounce (graphic I know), as
plummeting shares see a rash of buyers looking to pick up the
scraps.
In the case of
Titan, you can to look at how the industry is changing, global
economies are faring and what is happening to the price of
commodities. The third miss in a row for Titan should
tell you that things have been going wrong for a while and that
dead cat bounce might rollover once again.
Peers Weak
Look at peers like Caterpillar CAT, which is a Zacks
Rank #5 strong sell; while they also manufacture and sell similar
equipment, they are in a parallel business with even broader reach,
their stock has been getting pummeled as well.
Then if we
examine the commodities themselves and their trends, it again
becomes very difficult to justify an investment in TITN. The
PowerShares DB Agriculture
Fund DBA is an ETF that holds soft commodity futures
like sugar, wheat, corn, cotton, etc. Shares of that
ETF have been dropping since September of last year and don’t
appear to be relenting any time soon.
If bigger and
stronger peers are showing weakness and the sector’s lifeblood
(commodity prices) are moving lower, chances are that 2nd tier
companies like Titan will suffer.
Titans Pain May be Long Lasting
Sure Titan’s shares are back down to December 2012 levels and their
forward P/E of 10 may not seem all that high, but what if sales
continue to melt down?
Analysts still
expect almost 36% revenue growth to drive 19% in earnings growth in
2013. Those are lofty expectations in a weak economy.
If those numbers continue to deteriorate, the shares will most
likely do the same. As the company and their peers have
stated, they see clouds ahead; these are not the words you want to
hear if you’re buying for the long term.
If you’re banking
on the U.S. recovery carrying the stock, remember that our economic
growth is just barely hanging on and we are actually 5 years in our
current growth cycle, which some people seem to forget.
When that cycle
peaks and begins to move into contraction, you can be sure that
stocks will be the first to react as they often are. 5 years
is the average growth cycle.
Instead of
jumping on a stock with fundamental flaws because it seems cheap,
find a high quality, value stock that might be going
unrecognized.
It can mean the
difference between pain and profit.
Jared A Levy is one of the most highly sought after traders in the
world and a former member of three major stock exchanges. That is
why you will frequently see him appear on Fox Business, CNBC and
Bloomberg providing his timely insights to other investors. He has
written and published two tomes, “Your Options Handbook” and “The
Bloomberg Visual Guide to Options”. You can discover more of
his insights and recommendations through his two portfolio
recommendation services:
Zacks Whisper
Trader- Learn to buy stocks likely to have robust earnings BEFORE
they report.
Zacks TAZR Trader
– Technical Analysis + Zacks Rank. Best of both worlds approach to
find timely trades.
Follow Jared A
Levy on twitter at @jaredalevy
Like Jared A Levy
on Facebook
CATERPILLAR INC (CAT): Free Stock Analysis Report
CNH GLOBAL NV (CNH): Free Stock Analysis Report
PWRSH-DB AGRIC (DBA): ETF Research Reports
TITAN MACHINERY (TITN): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Invesco DB Agriculture (AMEX:DBA)
過去 株価チャート
から 5 2024 まで 6 2024
Invesco DB Agriculture (AMEX:DBA)
過去 株価チャート
から 6 2023 まで 6 2024