Why J.C. Penney, Sears, Pandora, and 2 Other Companies Should Be This Week's Big Movers
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
For everyday investors, it's tempting to check one's portfolio on a daily, or even hourly, basis. That's not the healthiest of habits, as it makes it that much harder to be a long-term, buy-to-hold investor. But we're realists here at the Fool, and we know everyone caves to that impulse from time to time -- myself included.
In that vein, there are five stocks that are very likely to make huge moves this upcoming week. If you're a shareholder in any of these stocks, prepare yourself for some volatility; make sure any buy or sell decisions you make are with a calm, cool, level head.
All five of these stocks are heavily shorted and are reporting earnings this week. That presents a perfect storm for short-term traders to cause outsized moves in these stocks. Here are the five stocks, when they'll probably be making moves, and what investors should be looking for.
% of Shares Short
When to Watch
Expected Revenue (Millions)
Green Mountain Coffee Roasters
Has any retailer had a tougher two-year stretch than J.C. Penney? The company has seen revenue dip 30% over the past three years, and the executive suite has become a revolving door. And as fellow Fool Adam Levine-Weinberg points out, the most perilous part of investing in the company is that it needs to show dramatic improvement if it wants to stay solvent. Short of a 20% jump in sales while improving margins dramatically, J.C. Penney won't be much of a turnaround story.
Green Mountain Coffee Roasters
This company, maker of the famous Keruig at-home coffee makers, seems to always be sitting in short sellers' bull's-eye. Part of that is because the company's patent expired in 2012, opening it up to a ton of competition that could start a race to the bottom. Sales have slowed since then, but margins have improved dramatically because of lower coffee bean prices. It's always a precarious situation when you have to count on having commodity prices stay low to support earnings growth.
Like J.C. Penney, the past two years have been pretty rough for Sears Holdings' Sears stores. Revenue has fallen 10% over that time frame, while earnings per share have continually been negative. The company made news last week when it announced that its Kmart stores will open at 6 a.m. on Thanksgiving Day. Cheap tricks like that are unlikely to turn the revenue tide, but investors have been excited about plans to spin off the Sears Auto and Lands' End businesses. Pay close attention to any changes in the company's forecast for the fourth quarter, as that's when the bulk of the year's sales are made.
A few years back, investors left GameStop for dead with the onset of gaming via the Internet. Why would people go to a store when they could get their games at home? The thinking seems rational, but GameStop has been proving the naysayers wrong for a while now. By focusing on digital sales, the company is trying to stay relevant. The biggest catalyst going forward that investors should stay aware of is the release of the next-generation PlayStation and Xbox, which are likely to bring in a lot of business for GameStop.
This company's business model is precarious, given it sometimes pays out more in royalties than it brings in from ad revenue. At the same time, it's getting a lot of pressure from behemoth Apple's iTunes Radio. It's pretty easy to see why investors are pessimistic. At the same time, however, Pandora has been able to slowly turn the tide toward profitability, while holding its own against Apple.
A steadier path to profitability
Investing in stocks like these might be exciting, but there's a smoother path to a comfortable retirement available: dividend stocks. Over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.
The article Why J.C. Penney, Sears, Pandora, and 2 Other Companies Should Be This Week's Big Movers originally appeared on Fool.com.Fool contributor Brian Stoffel owns shares of Apple. The Motley Fool recommends Apple, Green Mountain Coffee Roasters, and Pandora Media and owns shares of Apple and GameStop. 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.
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