By Matt Krantz, USA TODAY
If history is any guide, the ugliest stocks on Wall Street could surprise their doubters and turn out to be this year's beauties.
While investors often like to chase after the previous year's winners, it's often the losers that wind up scoring big.
Some of the worst five stocks in 2010 and 2009, including H&R Block and Zions Bancorporation, handily beat the market in subsequent years.
Three of the worst five stocks in 2008 also beat the market in 2009..
This limited recent track record is a reminder to investors that sometimes the best stocks are the ones other investors want nothing to do with.
"Some of these stocks (those that fell in 2010) might have more things than meet the eye that make things more interesting," says Robert Maltbie of Singular Research.
This trend might give hope to the most downtrodden stocks of 2011, including First Solar, Alpha Natural Resources and Netflix, which fell a bruising 74%, 66% and 61% respectively.
Investors who dig deeper can see that beat-up stocks can do some surprising things, such as:
Some are hopeful last year's losers might have a better year in 2012. Supply problems that hurt coal processor Alpha Natural are resolved, says Lucas Pipes of Brean Murray.
And Netflix is solving its cost and defection issues, says Eric Wold of B. Riley.
There are no guarantees. Stocks can go from bad to much worse. For instance, all five of 2007's worst stocks suffered massive declines in 2008. E-Trade, Circuit City, MBIA, Ambac and Washington Mutual fell 68%, 97%, 78%, 95% and 99.8% respectively in 2008.
B. Riley analyst Eric Wold says it will in a major look-forward report today for the film business. He predicts 4% growth in box office sales this year — the result of a 1% uptick in attendance and a 3% rise in average ticket prices. What makes him so confident, especially following the 3.9% drop in 2011? Wold says that more consumers would have gone to the movies last year if Hollywood hadn’t released so many dogs.
Continue Reading >“I think that’s a positive for Netflix,” said Eric Wold, a senior analyst at B. Riley & Co., in an interview with MarketWatch. “Up to now, they haven’t been able to connect to Facebook and Twitter. This can create a lot of marketing possibilities, as their customers can share what movies and TV shows they’ve been watching on Netflix.”
Continue Reading >Eric Wold, analyst with B. Riley & Co. in Santa Monica, Calif., believes Netflix’s defections could reach 4.7 million, which he said represent upwards of $445 million in disc rental revenue up for grabs. In a Nov. 16 note, Wold surmised that the majority of the aforementioned defectors would downsize their monthly rental activity since a-la-carte rentals carry a higher perceived cost than a monthly subscription.
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