Friday File: Motley Fool “recommending this former ‘darling’ stock”

What's being pitched by Stock Advisor Canada?

By Travis Johnson, Stock Gumshoe, November 18, 2016

Today’s teaser happens to also concern a stock that I’ve been curious about, so I’m taking the opportunity to follow the hints down the rabbit hole and do a little chewing on whatever it is I find down there.

The teaser ad comes in from Motley Fool Canada in an ad for their Stock Advisor Canada newsletter, and that group must be growing pretty nicely because the questions about their ads really seem have picked up among Gumshoe readers — this latest pitch is headlined “This is one beaten-down stock we love”… and it even includes a photo of Warren Buffett and a pithy Buffett quote:

“The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they’re on the operating table.”

So what is this company that’s on the operating table? Here are our clues:

“The stock I want to tell you about was once dubbed a Wall Street Darling.

“Yet the company has had a pair of unfortunate missteps and of course — shares have plummeted.

“The Wall Street Darling has been ‘downgraded’ by analysts everywhere, first in February, just a few short weeks before it began to plunge to new lows.

“Then it was downgraded again on March 16th, March 17th, March 29th, and as recently as April 1st.”

Sounds compelling, right? Who wouldn’t want to scoop up a great company after all the poo-bahs on Wall Street had downgraded it, crushed the shares, and given it up for dead? The downgrades they list include Goldman, Wedbush, Jefferies, Maxim Group, and Deutsche Bank, and the Fool ad says the stock is now 46% below it’s all-time high, and is down 16% just this year.

They even make a point of calling out several other Motley Fool “downtrodden” stocks that they’ve profited from in the past, like Netflix in 2007, Tesla in 2012, and Facebook in early 2015 — and those were all picks that Fool newsletters made, very successfully, though that was mostly David and Tom Gardner with their flagship Motley Fool newsletters in the US and not specifically these Motley Fool Canada analysts.

I particularly remember the 2007 recommendation of Netflix, partly because it’s one of the most successful teaser picks we’ve ever written about here at Stock Gumshoe… but mostly because it’s a stock that I didn’t buy because I didn’t find it compelling ...

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