A look at a list of 52-week lows sometimes signals market sentiment about certain sectors or broader financial trends. Here are a few critical bottoms hit last week:
Level 3 (NASDAQ: LVLT) would seem to be a poster child for the new demand for bandwidth. It has a huge national network covering 48,000 miles and a first-rate customer base including big telcos and cable companies. It also carries a lot of VoIP traffic. The company hit a 52-week low because it has something Wall Street hates right now -- a ton of high-yield debt backed by shaky cash flow. The debt is over $6.8 billion, and LVLT has had negative operating income for each of the past three years. The stock is being sold off just before earnings because any sign of weak earnings is exposure to significant balance sheet problems. Borrowing is not popular these days.
Toyota (NYSE: TM) should be riding high. It has passed General Motors (NYSE: GM) as the world's largest car company and is more profitable than any of its global peers. But, hyper-growth may be catch up with the Japanese company. It slipped from the top spot in the Consumer Reports vehicle reliability survey and had to recall 470,000 cars in its home market. GM's new UAW contract will also make it a rougher competitor.
Beazer Homes (NYSE: BZH) is a stock that would be expected to keep hitting new lows. The puzzle with it and its peers is how far down is the bottom? New and existing home sales keep falling and the consumer does not feel safe buying anything as expensive as a new home. But, now the home builders are being viewed as bankruptcy risks, which could take them down much further. At $8.41, Beazer is down from a 52-week high of $48.60, an astonishing slide. The market is starting to ask if its common shares are worth anything at all.
McClatchy (NYSE: MNI) is the third-largest newspaper chain in the U.S. These companies keep saying that they will solve their earnings problems with online ad growth and cost cuts. McClatchy keeps insisting that it can handle its $2.6 billion debt load. But, a number of newspaper companies reported earnings last week and there was no sign of any improvement. MNI has hit a low of $16.85, down from a 52-week high of $44.62, and now trades at just 60% of revenue. The market doesn't see newspapers coming back.
Douglas A. McIntyre is an editor at 247wallst.com.
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