These Stocks Couldn’t Maintain Momentum, Either: Diamond Foods, Inc. (DMND), Perfect World Co., Ltd. (ADR) (PWRD)

Page 1 of 2

All good things must come to an end. After seven straight days of gains, the S&P 500 finally lost four points. The Dow Jones Industrial Average, however, continued its string of up days, tacking on another three points to make it eight consecutive days of new highs.

Diamond Foods, Inc. (NASDAQ:DMND)As the Fool’s Jeremy Bowman pointed out the other day, a better economic outlook here at home is driving the market’s euphoria while much of the rest of the world teeters on collapse. So don’t go running over the cliff with them like a bunch of lemmings: This could just be a temporary situation. Let’s first see whether they had good reason to fall, as panic-fueled routs can sometimes lead to excellent buying opportunities.

Company % Change
Diamond Foods, Inc. (NASDAQ:DMND) (9.7%)
Perfect World Co., Ltd. (ADR) (NASDAQ:PWRD) (8.8%)
Yandex (8%)

That’s nuts
Last week nut grower Diamond Foods, Inc. (NASDAQ:DMND) surged higher on no apparent news, which I suggested would end up being a short-term phenomenon because there was no fundamental basis for the rise. That was borne out by yesterday’s crash after Diamond reported earnings that were only in line with analyst expectations.

Despite having lost the Pringles brand to Kellogg Company (NYSE:K) following its accounting shenanigans debacle that led to a restatement of its financials, it’s still apparent Diamond Foods, Inc. (NASDAQ:DMND) wants to be a snack-food player. Starting with its second-quarter results, it’s reporting in two segments now: nuts and snacks. The latter saw revenues rise 7% to $105 million, while nut revenues plummeted almost 30% as volumes cratered 37% from the year-ago period.

Yet it could have been so much more. Kellogg reported fourth-quarter earnings last month showing net sales soaring 18%, as Pringles drove most of the gains. As I noted at the time, “Without the acquisition, sales growth still would have come in at 5.3%, its biggest gain in more than a year, but it shows what Diamond Foods, Inc. (NASDAQ:DMND) could have enjoyed had it won the brand.” The stock is down almost 12% now from its recent highs.

Game over?
Chinese Web games operator Perfect World Co., Ltd. (ADR) (NASDAQ:PWRD) World also reported earnings the other day in line with expectations, but its outlook for the future is what sank the stock yesterday. It projected first-quarter sales to come in between 592 million yuan, or about $95 million at current exchange rates, to 619 million yuan, which is well below the 643 million yuan consensus estimate of analysts.

Management contends, though, that it’s investing in the future of its business, so that while it makes current-period results weaker than anticipated, it will pay off later on. Perfect World Co., Ltd. (ADR) (NASDAQ:PWRD) decelerated its in-game promotional activities and focused instead on its pipeline as well as content enhancements for its existing titles, but the market apparently didn’t buy into that argument.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!