August, 2010 was a horrible month to be invested in domestic equities, as the Standard and Poor's 500 index fell by approximately 5% in the month. Many other stocks did much worse than that, and investors who owned any of these names took much higher damage during the month.
IN PICTURES: 7 Forehead-Slapping Stock Blunders
Jabil Circuit (NYSE:JBL) was one of the worst performing stock in the S&P 500 in August, 2010, falling by 28%. Jabil Circuit is a contract manufacturer that makes products for major corporations in a variety of sectors, including telecom and technology. The stock has been declining steadily for more than a month, and wasn't helped by recent comments from Cisco (Nasdaq:CSCO) that growth was moderating, which was seen as negative for the entire sector. While the stock might seem a bargain to bottom fishers at its current price of $11.70, the stock reached a price of under $4 during the bear market low in March 2009.
DeVry Inc. (NYSE:DV) also had a rough August, falling 28%. DeVry Inc. reported earnings in mid August, and beat on guidance, revenues and earnings. However, the company is in the for-profit education industry, a controversial group, that is seeing increasing regulatory scrutiny from the Federal Government.
The Federal Government is a major source of revenue for these companies, through the payment of financial aid for tuition, and recent data from the government shows low rates of re-payments of loans from graduates of some of the for-profit operators. This may threaten future loans from the government.
Office Depot (NYSE:ODP) also fell 28% during the month. The company reported a smaller-than-expected loss in its second fiscal quarter that was reported at the end of July, 2010. Although the stock popped up on the news, it resumed its slide in early August, as competitor Office Max (NYSE:OMX) reported disappointing earnings and indicated lower sales in the current back-to-school quarter.
Advanced Micro Devices (NYSE:AMD) dropped 27% during the month, as investors fled most technology stocks expecting the worst in the economy. Advanced Micro Devices started to decline earlier in August, as reports began to emerge about a slowdown in personal computer sales. The stock dropped further after Intel (Nasdaq:INTC) announced that it would miss estimates on sales for the third fiscal quarter.
The Bottom Line
The equity markets performed poorly in August, 2010, as a consensus began to emerge that the economy was starting to weaken. Many stocks did much worse than the overall indexes, and these stocks may be a buying opportunity for intrepid investors that can stand against the herd. (To see what stocks led the way last month, see Best Stocks In August 2010.)
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