Monday Losers: THQI, BP and Anadarko

David Sterman's picture

Monday, June 14, 2010 - 11:00am

by David Sterman

Among the biggest losers in Monday's early trading are THQ (Nasdaq: THQI), BP (NYSE: BP) and Anadarko (NYSE: APC).

Top Percentage Losers -- Monday, June 14, 2010
Company Name (Ticker) Intra-Day Price Intra-Day
% Loss
52-Week High 52-Week Low
BP (NYSE: BP) $31.33 -7.8% $62.38 $29.00
THQI (Nasdaq: THQI) $5.18 -6.7% $8.82 $4.12
Anadarko (NYSE: APC) $41.71 -0.4% $75.07 $34.54

*Table includes companies with minimum market capitalizations of $200 million and three month trading volumes of at least 100,000 shares. All percentage returns are listed as of 10:53AM Eastern Standard Time. Click on ticker symbols for up-to-the-minute price quotes and percentage gain data.

THQ’s False Dawn

Video games stocks tends to rally into the holidays, and slump in subsequent months as investors first anticipate a strong holiday selling season, and then unload shares during the rest of the winter as these companies start to report seasonally weaker results. Video games maker THQ (Nasdaq: THQI) bucked the trend, as it is posted surprisingly robust results in its March quarter, pushing shares up well off of their lows. Well, that apparent strength proved to be ephemeral: The company just announced notable weakness in the sales of one of its gaming titles, leading management to sharply lower guidance. Shares are off nearly -7% this morning.

This is one of the perils of a thin slate of gaming titles. One bad game can drag down the bunch. Rivals such as Electronic Arts (Nasdaq: ERTS) are better insulated from that trend by having a much broader set of games to sell.

Action to Take --> THQ’s shortfall could lead to renewed rumors of industry consolidation. Most industry players are struggling to find growth opportunities, and mergers may be the cure to weak top- and bottom-lines. Yet with the exception of a buyout possibility, these shares hold no appeal, and are likely to fall further, perhaps down to their 52-week low of around $4. The bigger players may also see some struggles, but their broad set of gaming titles gives them the staying power to thrive the next time the gaming hardware platforms such as Sony’s (NYSE: SNY) Playstation are upgraded.

-------------------------------------

BP and the Dividend

Shares of BP (NYSE: BP) are off nearly -8% on fears that the company will suspend its dividend. Large investors who count on the dividend would allegedly dump shares if BP decided to halt its massive payouts. But the move would be a wise one: sending a signal that BP shareholders are feeling the pain along with all other constituencies. Moreover, by hoarding its cash, the need for any asset sales to cover costs would be greatly reduced.

Action to Take --> As long as the full set of assets stay in place, BP may well be able to fully restore the dividend when all spill-related expenses are accounted for. In effect, investors can still value the stock for its dividend yield - as long as they look out a few years. And in that light, this is a very high-yielding stock. BP believes it can capture an increasing amount of the spilling oil in coming weeks, but shares are unlikely to materially rally until the leak is completely stopped. And that might not be until August.

-------------------------------------

Anadarko sits and waits

On a related note, shares of BP’s drilling partner Anadarko (NYSE: APC) are fractionally off this morning on fears that any litigation BP faces will extend to Anadarko. Anadarko still controls some of the most compelling energy fields in the Gulf and could hold appeal to a buyer that could swoop in and get shares on the cheap - if that buyer is willing to shoulder the company’s incalculable liabilities.

Action to Take --> Anadarko has become quite cheap, and if its legal liabilities are not as bad as is feared, then shares will post an instant strong rally. It’s too soon to make that call. But it increasingly looks as if the size of its legal bills can be supported by its cash balances and borrowing capacity. Anadarko could also raise cash by selling off a partial interest in some of its best fields.

P.S. If you’re looking to find other ways to profit from an expected market drop, Mike Turner has unveiled two of his top-ranked inverse ETFs for his premium service, Mastering the Markets, that could turn potential profits of up to +35.7%. Mike firmly believes traders need to follow a set of rules to have the best chance for success, and for a limited time he’s offering premium access to his video from his completely packed San Francisco MoneyShow presentation. Learn how you can get the name of his latest picks and obtain this exclusive video, by clicking here.

David Sterman does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.