5 Stocks Poised for Huge Moves This Week
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.
Lean in, fellow Fools. I'm going to be giving you the names of five companies that will likely be some of next week's biggest movers. All five of these companies share two key traits: They are reporting earnings, and they are heavily shorted.
If you doubt that these traits can predict such swings, just look at the five stocks identified last week. On average, they moved more than 10% after reporting earnings. Whether the movements will be up or down is tough to tell, but if you're an investor in these five companies, it'd be good to mentally prepare for some volatility in the week ahead.
% of Shares Short
Expected Revenue (in millions)
Barnes & Noble
Sources: Finviz.com, E*Trade
When it started out as a public company, Qihoo's main focus was on providing Internet security products. Since then, however, it has emerged as China's second-largest Internet search engine.
The company has met with unexpected success in that venue, and shareholders have enjoyed a 270% ride up over the past year. But that, combined with Qihoo's P/E of 170, and a ceiling approaching in terms of market penetration when facing competition with much deeper pockets, has investors worried. With such a highly priced multiple on its stock, any slowdown in revenue for Qihoo could send shares sliding down.
After a precipitous fall following its IPO, shareholders in this Chinese solar company have had a pretty nice year, with shares trading 150% higher than they were on Jan. 1. A huge part of that boost came in May, when the company emerged as one of the strongest players in China's solar industry.
That being said, the company is still on precarious grounds and is at the whim of governments around the world. The U.S. has already slapped tariffs on Chinese solar parts, and if any government -- especially the Germans -- follow suit, it could severely hamper demand. As it is, subsidies from the company's home government are an important crutch propping the company up right now.
Not surprisingly, the fate of Beacon Roofing is closely tied to the overall housing market. Clearly, the Great Recession, caused in large part by an inflated housing market, was a huge wealth destroyer for Beacon investors. But since the market bottom in March 2009, Beacon has rebounded 230%, versus the broader market's 135% jump.
With expectations for a rebounding housing market already priced into the stock, any slowdown in the housing market could ding investor confidence. A series of downgrades has already taken its toll, as shares are down 15% since mid-July. Specifically, analysts are worried about softer-than-expected demand for residential shingle roof and re-roofing jobs.
Barnes & Noble
It's not too hard to see why Barnes & Noble is almost always on the list of big movers come earnings time. Borders bookstores have already bitten the dust, and the big thing keeping Barnes & Noble alive -- its Nook e-reader -- might not be enough to hold off Amazon.com.
Last quarter, Nook sales slumped markedly. And though revenue has stayed relatively stable over the past three years, for years now the all-important holiday season profit has been unable to cancel out the losses of the other three quarters.
Finally, we have another company that, like Barnes & Noble, is counting on a big holiday showing. Though it sounds a little silly to write on an investing website, the company's big missed opportunity as of late has been in the fashionable "skinny jeans" fad.
That, combined with the fact that a beleaguered Europe accounts for more than one-third of sales, has helped bring earnings down by 13% per year over the past three years.
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The article 5 Stocks Poised for Huge Moves This Week originally appeared on Fool.com.Fool contributor Brian Stoffel owns shares of Amazon.com. The Motley Fool recommends Amazon.com and Guess? and owns shares of Amazon.com. 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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