4 Stocks That Should Make Big 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.
Never would we here at the Fool suggest trying to time the market. It might be the best way to ensure that your retirement account eventually ends up at $0.00. So why would we want to talk about four stocks that will make big moves?
Rarely can we foresee when major developments will cause a company's stock to plummet or rocket higher. But when companies have a high short interest -- in other words, lots of investors are betting against them -- it's a recipe for volatility when they report earnings. If someone owns shares in such companies, it would be wise to prepare for outsized moves, and check yourself before making an emotional decision to buy or sell a stock.
The three stocks I singled out last week moved an average of 12% following earnings. This week, there are four stocks that shareholders need to prepare for. Here's what to watch:
% of Shares Short
Expected Revenue (Millions)
Cliffs Natural Resources
Capstone is a company that makes multi-fuel-powered micro-turbines that have the distinctive feature of very few moving parts, which means heating and cooling systems aren't necessary and emissions are low. Shares of the company have had a nice run over the past year, shooting up 67%.
The stock's jump can be credited to the micro-turbines' increasing popularity in the gas and oil field. Over the past few months, the company has received orders from companies operating in the Permian, Marcellus, and Utica Shale regions. But bears still have their doubts. Capstone has yet to turn a profit, and it isn't expected to until 2016.
This maker of educational toys and tablets for children saw its stock quadruple between 2011 and 2012, but the recent past hasn't been as kind for shareholders, as shares are down 40% since August. The company made its big financial gains from sales of the first two versions of its kid-specific tablets.
A big part of the stock's recent swoon surrounds LeapPad Ultra, the company's newest tablet, which isn't expected to perform nearly as well. Besides reportedly soft demand, the fact that Amazon.com is targeting the same child audience with its Kindle Fire is causing investors to worry. This quarter's earnings will be vitally important, as the holiday season makes up the bulk of the company's yearly revenue.
Cliffs Natural Resources
Cliffs, an iron ore producer in North America, has seen better days. Over the past six quarters, the company has reported shrinking revenue. Over that time frame, Cliffs' stock has fallen 55% and its dividend has been slashed by three-quarters.
The culprit is relatively easy to explain. The company's iron ore pellets are used to manufacture steel. But with weak demand both at home and from China, commodity prices have been low, and that has put a crimp on the company's margins, with fixed costs eating up tons of cash. Though results for the fourth quarter will be important, its guidance will be what investors are really focused on.
If you're reading this article from 30,000 feet right now, it's probably thanks to Gogo. The company focuses on providing Internet connectivity to airlines worldwide. Just six years ago, Gogo recorded an average of only 285 in-flight Internet sessions per day. By last year, that number was over 47,000 average daily sessions.
That helps explain why the company's stock surged 270% between August and December of last year. Unfortunately, for investors, shares have had a rough ride back down to Earth. The main culprit has been the announced divestment by a key investor. Although this probably enticed short-sellers to get in on the action, it doesn't affect the company's fundamentals one bit.
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The article 4 Stocks That Should Make Big Moves This Week originally appeared on Fool.com.Brian Stoffel owns shares of Amazon.com. The Motley Fool recommends and owns shares of Amazon.com and LeapFrog Enterprises. 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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