Like Huge Swings? Focus on These 4 Stocks This Week
If you're an adrenaline junkie who likes seeing the stocks you own take big swings -- hopefully upward -- there are four companies reporting earnings this week that you'll want to keep an eye on.
Though it may sound odd to predict huge swings, there's a tried-and-true method to finding such stocks. By looking for companies with a heavy short interest -- lots of investors betting against them -- and looking to see when these companies report quarterly earnings, you can prepare yourself for big swings.
The five stocks identified last week using this method moved by an average of over 10% following earnings, and this week should be no different. Here's what to look for:
% Shares Short
Expected Revenue (in Thousands)
Kodiak Oil & Gas
Sources: finviz.com, Yahoo! Finance, E*Trade.
It should be noted that Celldex is the only company reporting earnings before the market opens. The other three companies report after the market closes, so any major swings in stock price will occur during the next trading day.
You can't be blamed for thinking there's an error in the expected revenue column for Celldex: $87,000 is a pretty small number. Why would anyone invest in this company? Because it has two products in the pipeline to treat cancer. One offers hope for those suffering from a rare type of brain cancer, while the other aims to attack metastatic breast cancer.
While this week's earnings announcement won't likely have huge news regarding results from testing (those are usually made public as they become available), the question and answer session on the company's conference call could reveal details as to how the company feels about each drug's chances for regulatory success.
Geron is another drug company that has a fairly scant revenue stream. Once fairly controversial for its focus on stem cell therapeutics, Geron has shifted its priorities.
Actually, I should probably say it has shifted its priority ... singular.
That's right; this biopharmaceutical company only has one real drug in the pipeline -- which helps explain why its shares are sold short. But so far, investors see a lot of reason to be excited about the company's imetelstat treatment. The drug focuses on inhibiting telomerase -- an enzyme that helps cancer achieve its uncontrollable growth. Currently, imetelstat is in phase 2 trials.
Whether or not imetelstat proves to be successful or not won't be revealed this week; as with Celldex, there won't likely be major announcements. But the company's conference call should provide fodder for investors trying to get a read on how management thinks the drug is performing.
As if we didn't already have enough drug companies, MannKind is the third on this week's list. Unlike the other two companies, however, MannKind is much closer to seeing its primary drug gain regulatory approval.
Afrezza is an insulin inhaler used to treat folks with type 1 and type 2 diabetes. Because of its fast-acting properties, as well as the ease with which it is ingested, it could be a very popular option for diabetes patients.
Currently, Afrezza is in late-stage clinical trials, having just submitted its new drug application to the FDA -- the third time it has done this in the past four years. Listen closely to the conference call for any details on the approval process.
Kodiak Oil & Gas
Finally, we have Kodiak, a company with oil and gas operations in the Williston and Green River Basins of the Bakken Shale, which stretch from Colorado, through Montana, and to the Dakotas.
Shares of the company have been on a tear since May, up almost 80%. That's thanks in large part to a spike in production, with Kodiak expecting to produce 42,000 barrels of oil per day by the end of 2013.
Shorts are likely counting on a confluence of factors to hold Kodiak down over the long run. These factors include rough winters -- which isn't uncommon in that area of the country -- and fluctuating commodity prices.
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The article Like Huge Swings? Focus on These 4 Stocks This Week originally appeared on Fool.com.Fool contributor Brian Stoffel and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.