10 Comeback Companies for 2012
Nothing warms an investor's heart like a good overcoming-the-odds tale -- or at least the possibility of one.
Who doesn’t love a comeback story? From Mickey Rourke’s career-resurrecting performance in The Wrestler to Reggie Miller and the Indiana Pacers’ epic eleventh-hour victory over the New York Knicks in the 1995 NBA playoffs, nothing warms our hearts and inspires our psyches like a good overcoming-the-odds chestnut.
So, in the spirit of hope for a brighter 2012, Minyanville has taken a look at 10 companies that are singing a certain Gloria Gaynor tune and trying to turn the tragedies of the past year into triumph.
1. Green Mountain Coffee Roasters
When Greenlight Capital hedge fund manager David Einhorn sells short, investors follow suit. Take the case of Green Mountain Coffee Roasters (GMCR). The stock had been among the year's best performers, but Einhorn’s big bet against it, based on its accounting and business practices, took all the caffeine out of the K-Cup maker. The stock had been selling at $111 per share in September, but dropped to $44 within a month, following Einhorn's widely publicized criticism. Although the company reported 91% fourth-quarter revenue growth, the share price continues to hover around $45.
So what could change in 2012? Loyal investors are hoping that strategic partnerships with Caribou Coffee (CBOU), Folgers, Starbucks (SBUX), and Dunkin' Brands Group (DNKN), combined with a possible resurgence in popularity of its Keurig machines, will help percolate Green Mountain’s stock price.
2011 was, without a doubt, a tumultuous year for Netflix (NFLX) with its subscription fee hike, Qwikster blunder, and ill-timed services outages. At the end of November, the company announced it would sell $400 million in stock and convertible bonds in a bid to raise cash. And while its share price had dropped to $70 at that point (down from a high of $304 in July), the company was spending an average of $222 per share to buy back its own stock.
Although many have written off the online rental house, predicting an even worse 2012, “the bulls say that, without much true competition out there, Netflix still is a powerhouse.” For better or worse, Netflix still has the name cache for online video streaming, and as soon as consumers begin gradually gravitating away from physical media, Netflix will reap the rewards for what it does best.
The world’s largest computer manufacturer may be down, but don’t count it out. After taking a series of beatings to its bottom line under Leo Apotheker -- specifically, losing 45% of its share price during his abbreviated tenure and suffering from the high-profile flop of the TouchPad Tablet -- former eBay (EBAY) CEO and California gubernatorial contender Meg Whitman has taken the helm. Two of Whitman’s first orders of business that could juice Hewlett-Packard's (HPQ) floundering share price: Saving the firm's in-house PC division and releasing its WebOS operating system to an open-source project.
4. Bank of America
Considered by much of the country as one of the Wall Street banks most deserving of a place in Dante’s fourth circle of hell, Bank of America (BAC) isn’t going to get a whole lot of sympathy from the noninvesting public regarding its recent poor performance. With its stock price hovering around $5 due to its exposure to mortgage risk, Bank of America claimed the dubious honor last Monday of having the biggest fall in the Dow Jones Industrial Average (^DJI).
One of the lone dissenters in a sea of BOA doomsdayers, Credit Suisse large-cap bank analyst Moshe Orenbuch lists the company as one of next year’s top bank stocks. “While near-term revenue headwinds continue, [Bank of America] has significant opportunities to accelerate revenue growth in 2012 by re-pricing,” says Orenbuch. “In addition, we see opportunities to improve capital and book value through optimizing the balance sheet. Streamlining of businesses could lead to further strategic dispositions and asset run-off.”
5. Research In Motion
The foreboding headlines are old hat by now: “Research In Motion Stock Hits New 52-Week Low”; "RIM Continues Its Domination of the Caribbean!"; “Apple's App Store Now Worth More Than All of RIM.” But hey, it’s not like things could get worse, right? (Don’t answer that.) Crushed by the competition coming from Android (GOOG) and Apple's iOS (AAPL) devices, the BlackBerry makers have struggled to keep up -- much less stay ahead -- with their smartphone brethren.
The second half of 2012 could be another story, however. That’s when RIM’s belated BlackBerry 10 is slated to hit the market, and maybe then, on a wing and a prayer, those poor unlucky Canucks could finally take advantage of their $1.5 billion in cash and use it to find something that might outshine Apple and Google.
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