6 Big Losers on a Strong Day (HAYZ, HSII, PEP, KO, RACK, RBS)

October 14, 2008 by Douglas A. McIntyre

Down_arrow_redTraders and investors alike love to look for stocks that are going to run up with a strong market.  Yesterday was a record DJIA point move and today we have at least buying strength at the open.  But when traders see stocks that are weak in strong markets, they generally either stay away from those companies or they put on bets against them for days as the bad news is out.  Imagine how they’d do if the market was down.  Below is our list of big losers on a strong day.

Hayes Lemmerz International Inc. (NASDAQ: HAYZ) is down over 25% at$1.80 in early trading.  This maker of fabricated steel and castaluminum wheels for cars may just be giving back half of its gains fromyesterday.  Its 52-week trading range is $1.28 to $5.02.

Heidrick & Struggles International Inc. (NASDAQ: HSII) is hidingand struggling after lowering net revenue to approximately $630million, down from prior guidance of $650 to $660 million and comparedto consensus of about $627 million.  The executive search firm alsosees operating margin of approximately 10% compared to prior guidanceof 13%.  Shares are down almost 5% at $24.53 and its 52-week tradingrange is $22.58 to $45.57.

Pepsico, Inc. (NYSE: PEP) posted earnings at $0.99 EPS net and $1.06core earnings vs. $1.08 estimates and put 2008 earnings at $3.67 to$3.68 on a core basis compared to estimates of $3.74.  The company alsoannounced that it would shed 3,300 jobs under its new productivity planand would take $550 to $600 million in pre-tax charges.  A staple likesoft drinks, bottled water, and chips laying off 3,300 workers is notexactly the norm.  This one if off almost 9% at $56.30, and its 52-weektrading range is $53.21 to $79.79.

Coca-Cola Co. (NYSE: KO) is feeling a sharp sting today too.  It seemsthat the woes of Pepsi are creating an "earnings taste test challenge"for Coke.

Rackable Systems (NASDAQ: RACK) is getting racked after the server andstorage company issued an earnings warning.  It now sees a loss for theyear now, which was not expected by Wall Street even if the street waswilling to accept lower numbers.  Shares down 8% at $7.99 right afterthe open and its prior 52-week trading range before a $7.15 printtoday) was $7.47 to $14.51.

Royal Bank of Scotland Group Plc (NYSE: RBS) is now down over 30%.  Itis barely a $1.25 stock, but this is a surprise considering the bailoutpackages that are being thrown in the US, the UK, and the EU.  It lookslike these guys are choking just like the character on the commercial.

Jon C. Ogg
October 14, 2008