SLIDESHOW: 7 Naughty and Nice Stocks of 2012
- Naughty: Facebook (NASDAQ:FB)
Perhaps the most obvious candidate for a lump of coal is the social networking company whose IPO was bungled so badly. True, the immediate fault can be traced to the deal’s underwriters and to the exchange that was ill-prepared for the frenzied attempts on the part of investors to transact trades, but the company played a role, too. Had it not acceded to an IPO price that clearly was very richly priced, with no room for error, a stumble wouldn’t have had such a negative impact on the share price and the news of a disappointing initial earnings release wouldn’t have been as devastating. Even after a strong bounce in recent weeks, the stock remains 26 percent below the IPO price.
- Nice: Michael Kors Holdings (NYSE:KORS)
Other high-end retailers have shown signs of faltering revenues or sales levels, but not Michael Kors, which went public almost exactly one year ago. It has rolled out new boutiques within larger department , and benefitted from increased recognition of the company’s brand name. Revenue was up 74 percent, as of the end of its fiscal second quarter in late September, while earnings doubled. In contrast to Facebook, here is an IPO that under-promised and over-delivered. Shares are up 87 percent this year.
- Naughty: J.C. Penney (NYSE:JCP)
The idea of "store in store" boutiques may be working for Michael Kors, but as a part of the overhaul plan by J.C. Penney’s new management team, they appear to be a dismal failure. Shoppers are staying away in droves, left disaffected by the lack of bargains, and the company has even had to suspend its dividend to preserve cash. The stock has lost 45 percent in 2012. That earns the beleaguered retailer a few lumps of coal right there.
- Naughty: Chesapeake Energy (NYSE:CHK)
Chesapeake Energy has not only lost 23 percent so far this year, but it courted controversy and gave investors headaches with some fairly major governance missteps along the way. Chesapeake may have been named one of the best companies to work for in America, but it didn’t have to prove it deserves that title by giving its founder and CEO Aubrey McClendon unusual perks. The SEC has been looking into McClendon’s special deals. Admittedly, the company has made progress with asset sales, but not rapidly enough, and capital spending still outstripped revenue in the third quarter.
- Nice: PulteGroup (NYSE: PHM)
The homebuilder is buying back $1 billion or so of its debt, just the latest piece of good news from this beneficiary of the housing market rally that has lifted the entire industry. Earnings are coming in higher than expected, and the company reported more closings on new home purchases and higher sales prices on those homes for the third quarter. The company clearly seems to have navigated the financial crisis and the real estate debacle that accompanied it, and the market has rewarded it with a 161 percent gain.
- Nice: The Gap (NYSE:GPS)
A year ago, Gap was a drag on the retailing industry; this year, thanks to being on target with trends like colored denim and “Mad Men” fashion looks at its Banana Republic stores, it ranks among retailing’s big winners. Better still, the company’s management seems to have a grip on what had been a pesky inventory problem. Those fixes have made the stock fashionable again, driving it 72 percent higher.
- Naughty: Knight Capital (NYSE: KCG)
Another big piece of coal goes to Knight, once a powerful Wall Street trading firm that was brought to its knees this year when one of its trading programs ran amok and cost the firm $461.1 million in losses. The only question now is which of the rival bidders will end up acquiring the rights to Knight as the company approaches the end of its independent life.