I follow quite a lot of companies, so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I'd be unable to keep up on my favorite sectors and what's really moving the market. Even worse, I'd be lost when it came time to choose which stock I'm buying or shorting next.
Today is "Watchlist Wednesday," so I'm discussing three companies that have crossed my radar in the past week -- and at what point I may consider taking action on these calls with my own money. Keep in mind, these aren't concrete buy or sell recommendations, nor do I guarantee I'll take action on the companies being discussed weekly. What I can promise is that you can follow my real-life transactions through my profile, and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.
Patriot Coal (NYS: PCX)
Battleship sunk, battleship sunk! OK, so it's not that bad, but you wouldn't know that by the greater-than-50% pirouette Patriot Coal took off the diving board yesterday following a confirmation from the company that it has entered into a new $625 million revolving credit facility. Patriot is looking to find any reasonable way to strengthen its balance sheet since it's losing money because of near-decade-low natural gas prices eating into coal demand. In fact, Patriot is one of a handful of coal producers to shutter mines in lieu of weakened coal demand.
Perhaps less important than Patriot's survival is what it could mean for the rest of the coal sector, which is (no sugarcoating it) overcrowded and oversupplied. Coal remains a mainstay energy source in the U.S. and will remain so over the next 10-20 years at least, so Patriot's success or failure in refinancing could open the door for other struggling coal producers like Arch Coal (NYS: ACI) and give them a little breathing room. Arch recently lowered its dividend by 73% in order to conserve cash in light of weak demand but could find some strength if weaker plays in the sector bow out because of financing issues. Keep your eyes peeled to the coal sector, because great values are brewing.
First Solar (NAS: FSLR)
I've cautioned twice now that I felt First Solar was headed for the single digits -- first at $31.80 and then again at $26.73. Sitting at just $13.60 as of this writing, that call looks to be coming to fruition.
Unfortunately, that may be just the beginning of the pain for current shareholders. New legislation from the U.S. government placing a 31% anti-dumping tariff on top of an existing 3%-5% tariff was meant to make Chinese solar products less attractive and allow U.S. panel manufacturers to compete better against Chinese competition. But now, it looks like it could have exactly the opposite effect.
As my Foolish colleague Joel South points out, the tariffs could create a supply glut at home, since many U.S. companies actually supply components to China's solar panel producers. The industry is already having a hard enough time turning a profit with panel prices essentially in free-fall, and this tariff could be the final straw. It's possible there could be even more backlash from China against the move, which could further depress First Solar's earnings. It remains a stock worth watching, but one I'd keep far, far away from.
Facebook (NAS: FB)
Hey, did you hear about this little social media site called Facebook that went public last week? If you haven't, find a cave closer to civilization!
Facebook is a company I wish I could simply ignore and then perhaps the emotional day traders would go away, but unfortunately its presence in the Internet space requires close attention. However, it wasn't the company's fundamentals, but multiple trading glitches at the Nasdaq OMX (NAS: NDAQ) that kicked the stock out of the gate not as the most-anticipated IPO of all time but as a lead-filled balloon. With lawsuits beginning to roll in surrounding the trading gaffes and a select few trades still unaccounted for days later, it has all the makings of a botched IPO.
Facebook itself has a lot of questions to answer including how it will monetize its mobile user base and how it will keep shareholder interests in the forefront with King Zuckerburg at the helm. It's definitely watchlist worthy, but far from a buy at the moment.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below and consider following my cue by using the links below to add these three companies to your free personalized watchlist and keep up on the latest news with each company.
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At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He's a total nerd when it comes to making lists. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Motley Fool newsletter services have recommended buying shares of First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that believes transparency comes first.
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