NEW YORK (TheStreet) -- The last time I talked about Jabil Circuit (JBL) I said the company was going to remain in a "holding pattern" for the foreseeable future. I didn't believe it was going to take this long.
The company is in the midst of a very important transition that has been going on for almost a year. Although Jabil is one of the best brands in the electronics manufacturing service (EMS) business, the company has bigger ambitions including building its capabilities in diversified manufacturing, an area where (among others) Apple (AAPL) is a very important customer.
Unfortunately, entering the diversified manufacturing space has come at a pretty significant cost to shareholders. After trading as high as $27.40 a year ago, the stock has fallen to $16.39 two months ago -- losing as much as 40%. I don't believe this trading pattern will remain this way indefinitely. Investors, however, remain unsure.
I don't doubt Jabil is making the right transition and taking the necessary steps to ensure its long-term viability, but I do question the aggressiveness and the toll it has taken on Jabil's core business. With third-quarter earnings due out on Wednesday, management will have a chance to change the stock's near-term trajectory.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV