AutoZone, Inc. (AZO), Ctrip.com International, Ltd. (ADR) (CTRP), Alpha Natural Resources, Inc. (ANR): Should You Buy Now?

While I don’t know the future demand for coal, I do know that Alpha Natural Resources, Inc. (NYSE:ANR) is globally diversified and that it’s highly vulnerable to the weakness of large markets. In its last quarter alone, sales fell 31% and its margins continued to worsen. To me, this doesn’t look like a company that is nearing the end of its decline, but is rather continuing to decline in a rapid manner. Therefore, I have to agree with S&P, and suggest that Alpha Natural Resources, Inc. (NYSE:ANR) is not a buy at this time.

Conclusion

In the market, downgrades often create opportunity. On Monday, there were two cases where I think investors could benefit from the post-reaction of a downgrade. In my book I discuss this topic in great detail, with one of the core lessons being to determine whether or not the reasons for the call are already priced into the stock. If a stock has been downgraded five times in six weeks for the same reason then chances are that its valuation is priced for the reason noted. Then, it becomes a question of valuation, and if the valuation is attractive relative to fundamentals and compared to the broader market, then you might just find yourself a golden opportunity.

The article Did Monday’s Market Moving Downgrades Create a Buying Opportunity originally appeared on Fool.com and is written by Brian Nichols.

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