24/04/2014 01:12:56 Cookie Policy Free Membership Login

Laggard Stocks in Up Market: SAVE, HNP, LCC

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Markets are trading up today, thanks to the generous stimulus package announced by the Federal Reserve on Thursday. Individual stocks are also doing well with Apple Inc. (NASDAQ:AAPL) touching yet another all-time high.

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Though, in Apple’s case, it is because of the new shiny iPhone 5. According to the rumors, the phone is already sold out online.  However, not every stock is as lucky as Apple. Even, in this overall up market, there are certain stocks which took a nosedive due to diverse reason. While it is good to notice winners, it is equally important to keep an eye out for losers. Taking account of tumbling shares not only lets you make decision about the stocks that need to be kicked out of your portfolio, but also provide valuable information about attractive entry points. So, let’s have a look at the stocks which are going down today:

Spirit Airlines Inc. (NASDAQ:SAVE): The airlines stock is trading 14.10 percent down at $16.89. Now this is one stock which certainly is not a good candidate for purchase, even at this relatively lower price point. The main reason behind the tumble is the recent traffic data released by the company. Spirit Airlines also gave gloomy revenue forecast, further triggering the decline.  The company expects its total revenue per available seat mile for the quarter to fall by 2.5 to 4.5 percent. Though, Spirit Airlines blames Hurricane Isaac for this shortfall, analysts believe that there is overall weakness in the aviation sector. Spirit Airlines has seen its stock oscillating in the range of $10.73 and $24.75 in the past 52 weeks. However, despite being about 30 percent down from its highs, the stock is unlikely to provide you any healthy upside potential in the near future. Spirit Airlines seems be inundated with the bad news lately, as its stock has been downgraded from ‘Outperform’ to ‘Market Perform’ by equity research firm Raymond James. Another research firm, Dahlman Rose slashed the stock price target from $27 to $23. So, in case of Spirit Airlines, it is better not to catch the falling knife.

Huaneng Power International Inc. (NYSE:HNP) While most of the utility company stocks decided to follow the general market trend and are in green territory, Huaneng Power International is down 6.33 percent. The stock is currently at $27.68, off its intraday high of $28.23. While the company recently announced completing its trial run for a new project, it also withheld announcing any dividend for the first half the year.  Huaneng Power International also announced receiving approval for its Henan Huaneng Mianchi Cogeneration Power Plant. The company holds 51 percent stake in the project. So, while this new project sounds like a good news for the company and stockholders, I am less than impressed with other parameters of the stock. The company already has low dividend yield of 0.90 percent and high Price Earnings Ratio of 28.29, which makes it an expensive stock. Further, it is also trading close to its 52 weeks high of $29.97. Therefore, I am of the opinion that in absence of any compelling stimulant, the stock is unlikely to go enough high to yield substantial returns.

US Airways Group Inc. (NYSE:LCC): This stock is yet another casualty of growing soft trend in aviation sector. US Airways Group lost 6.04 percent of its value today and its stock is currently trading at $10.58. Following Southwest’s lead, US Airways Group also announced $10 per round trip fare increase for some of its sectors. The price increase is likely to put further pressure on traffic volume and the impact is clearly seen on the stock price today. While all the major airlines stocks are trading down, US Airways Group stock has taken the royal tumble. Unfortunately, the decline in price has come with equally strong volume. The stock has already traded 9.09 million shares, in comparison to its usual volume of 8.48 million shares. On the brighter side, the stock has been rated ‘Overweight’ by JPMorgan Chase, though its price target was marginally slashed from $17.50 and $17. Imperial Capital also chose to retain its Outperform rating for the stock, but cut the price target from $22 to $19. Despite these recommendations, I would retain my cautious stance about aviation sector in general.

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