Why Williams Partners LP (WPZ), Alcoa Inc. (AA) and Ambarella Inc. (AMBA) Are 3 of Today’s Worst Stocks

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Good news on the Greek-debt front spurred another rally to start out the new week, with the NASDAQ Composite hitting a new record high. The S&P 500 didn’t do so bad either, gaining 0.61% to close at 2,122.85.

Why Williams Partners LP (WPZ), Alcoa Inc. (AA) and Ambarella Inc. (AMBA) Are 3 of Today's Worst StocksIt wasn’t a great start for the new trading week for all stocks, however. Alcoa Inc. (NYSE:AA), Ambarella Inc. (NASDAQ:AMBA) and Williams Partners LP (NYSE:WPZ) were all rather deep in the red. Here’s what happened.

Ambarella (AMBA)

In retrospect, the 21% tumble from Ambarella today following Friday’s near-6% loss can’t come as a complete surprise. AMBA shares were up more than 150% year-to-date as of last Thursday, with the bulk of that gain materializing just since mid-May. The only thing needed to pop the bubble from this action-camera technology company was the right prompt.

That prompt surfaced on Friday. That’s frequent naysayer and well-known short-seller Citron Research opined that AMBA was worth much less than its then-current value near $127. Citron’s Andrew Left set a target price of $60 per share of AMBA for a 12-month timeframe, and established a $40 target for an 18-month time span.

To be fair, with AMBA valued at 15 times its trailing revenue, the Citron report has some merit; even in the best-case scenario Ambarella was going to struggle to justify its valuation anytime soon. Andrew Left has a reputation for questionable agendas, however, and a less-than-clear track record.

Alcoa (AA)

It’s not as if investors didn’t already know aluminum company Alcoa (AA) was facing a headwind. They were simply given a not-so-gentle reminder of that reality today.

Blame Sterne Agee for doing most of the damage. The research firm downgraded AA from a “buy” rating to a “neutral” rating, and lowered its price target on Alcoa shares to $12. Sterne Agee analyst Josh Sullivan noted:

“2014 was a ‘Goldilocks’ period for aluminum with high premiums, reduced Indonesian bauxite supply, and Chinese curtailments on smelting/exports. While Alcoa has radically altered its cost structure these global trends are reversing. Therefore, after 2Q14 there are few near-term catalyst to justify the risk/reward in the near-term.”

With today’s 1.4% stumble, AA is now down more than 25% year-to-date.

Williams Partners LP (WPZ)

While several sectors’ stocks as a whole went a tad haywire today, the energy sector saw far more than its fair share of volatility, both good and bad. You might want to have a seat and take some notes.

As of the end of last week, Williams Companies Inc. (NYSE:WMB) was ready to acquire Williams Partners. On Sunday, however, competitor and peer Energy Transfer Equity LP (NYSE:ETE) offered to buy Williams Companies, offering $64 per share of WMB.

There was just one catch … Williams Companies had to axe its plans to acquire WPZ if it wanted to be acquired by Energy Transfer Equity LP. Though Williams Companies has rejected this offer, the market smells something like a bidding war coming on.

The big winner in the complicated triangle is WMB, which was up 26% on Monday now that it has been identified as a potential acquisition target. Conversely, the big loser was Williams Partners LP, since the original offer from Williams Companies may end up not going through now. All told, WPZ lost more than 7% of its value on Monday.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/06/williams-partners-lp-wpz-alcoa-inc-aa-ambarella-inc-amba-3-todays-worst-stocks/.

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