Polypore Loses the Charge

Focus: STOCKS

Jim Jubak Image Jim Jubak Founder and Editor, JubakPicks.com

The battery component maker's very cautious outlook in this generally oversold market has convinced MoneyShow's Jim Jubak, also of Jubak's Picks, that there may be better buys right now.

Polypore International (PPO) has staged a gradual but solid recovery from its August 28 closing low at $31.39, to reach $37.78 on November 19.

Despite that 20% gain, I still decided to sell the stock out of my Jubak’s Picks portfolio on Friday, November 16. When I sold, I was still looking at a 30.5% loss since I added the stock to my portfolio on January 13.

So why sell? Why not wait until the gradual upward trend reduces my losses even further?

It’s never a good idea to let a desire to “get back to even” drive your investment decisions. In this case, I think the key points in making this decision should be:

  • How long it would take Polypore to get back to even or better—in other words, what’s my likely return over what period if I continue to hold?
  • How does that compare to the potential returns I could earn from other opportunities in the current market?

I think Polypore’s October 29 report of third-quarter earnings supports a decision to sell. The company earned 37 cents a share, beating the Wall Street consensus by 3 cents a share. However, revenue dropped by 6.6% from the third quarter of 2011, although it came in, at $177.6 million, above the analyst forecast of $174.22 million.

But it’s the company’s guidance that really struck me.