Last Friday there were numerous high-profile stocks to fall lower -- some caught my attention while others did not. The ones that did catch my attention were violent falls, or aggressive selling, due to fundamental and technical fear. However, in the midst of these downtrends there could be value, and I am looking at four such situations.
Bad News for Intel Corporation (NASDAQ:INTC) Might be Priced Into the Stock
Intel has lost almost 20% of its value in the last year, and sustained one of its biggest blows on Friday after announcing earnings, losing 6.31% of its value. The stock slid lower after announcing guidance that was slightly below consensus and then guided for major increases in spending on its capex budget.
Intel’s high capex spending is a result of a $2 billion upcoming investment on 450mm-wafer developments, in an attempt to boost sales of netbooks and similar products. Obviously the market responded badly. However, earnings weren’t that bad and neither was guidance. The company still expects low-single digit growth in 2013, which is impressive considering the PC market. Therefore, with a forward P/E ratio of just 10 and a dividend yield of 4.2% for 2013, I think this loss might be an opportunity, as all bad news is priced into the stock.
Deep Value that Could Reverse
After one of the best three-year runs of any stock in the market, Mellanox Technologies, Ltd. (NASDAQ:MLNX) has now lost more than 40% of its value over the last six months. The company has fallen due to fears of new competition from Intel, and recently issued a Q4 earnings warning thanks to weaker demand, macro issues, and a technical problem. However, this is a company that could still easily double, even triple, in size over the next two to three years, and has all potential problems fully baked into its valuation.
On Friday, Mellanox lost more than 3% of its value following the Intel earnings, which is somewhat ironic seeing as how fears of Intel’s growth are what initially led to its decline. However, this is a company with a valuation that is hard to explain. It’s currently guiding for revenue of $120 million, which would be growth of about 65% year-over-year. In a market that rewards companies with such aggressive growth, Mellanox’s forward P/E ratio of 14.46 is highly attractive. Therefore, it might be wise to explore a potential investment.
After Breaking Out, Arena Could Go Higher
After a strong start to 2013, and after finally breaking out of its $8.00-$9.50 trading range, shares of Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) fell considerably lower on Friday. The stock fell 6.51% on more than twice its average three-month volume, and with no news. Therefore, it was a technical fall, but the fact that it did break out of its six-month trend is still something to celebrate. I would now watch this stock closely, because if it begins to trade higher, it could very well continue to rally back above $10.