4 Stocks That Should Make Big Moves on Thursday

Most investors are best served with a solid buy-to-hold investment strategy. But here at the Motley Fool, we like to have a little something for everyone. So today, we'll cover four stocks that are likely to make huge moves on Thursday.

The reason for these huge moves? An abnormally high number of investors shorting -- or betting against -- these stocks. When major news comes out about companies that are heavily shorted, their stocks are likely to be very volatile. All four companies are reporting earnings on Thursday, and that definitely qualifies as "major news."

Just this past Tuesday, I called out three stocks with similar characteristics. On average, these stocks moved about 10% after earnings were released.

So, without further ado, here are the four stocks to watch on Thursday:

 

% Shares Short

When

Expected Revenue (millions)

Expected EPS

Cliffs Natural Resources (NYSE: CLF  )

31%

After Market Close

$1,500

$0.66

Deckers Outdoor (NYSE: DECK  )

30%

After Market Close

$386

$0.71

Sirius XM Radio (NASDAQ: SIRI  )

11%

Before Market Open

$970

$0.02

Zynga (NASDAQ: ZNGA  )

5%

After Market Close

$143

($0.05)

Sources: finviz.com, Yahoo! Finance, E*Trade.

Because Sirius XM will release its information before the market opens, you can expect to see big moves by tomorrow morning. With the other three companies, however, earnings come out after the market closes, so the huge swings will likely take place in after-hours trading.

Cliffs Natural Resources
Cliffs is an iron ore and metallurgical coal company with operations in the United States, Canada, and Australia. Shareholders have endured a rough 2013, with shares down about 40%. Much of that drop came in February, when the company announced a huge quarterly loss and a significant dividend cut.

There are lots of reasons shorts have piled onto this stock. For starters, costs are high for anyone in the mining business, and Cliffs is no exception. Secondly, mini-mill operators using newer technology have been able to bypass much of what Cliffs is offering up. And third, global demand and prices for steel are cyclically low.

Deckers Outdoor
Deckers has several shoe brands under its corporate umbrella, but the two most important are Ugg boots, and Teva sandals. The company's stock has had a strong showing in 2013 -- up 45% -- after a brutal 2012.

But most of the reasons that had to do with last year's steep drop are still lingering in the minds of those shorting the stock. Chief among those reasons are higher costs for the sheepskin that makes the Ugg boots distinctive, as well as data showing that consumer interest in Uggs may be waning after more than a decade of popularity.

Sirius XM Radio
If you think Sirius' 2013 has been impressive -- it's up 43% -- consider that, if you bought shares in March of 2009, you'd be sitting on shares that have appreciated 8,140% in value! The company has been actively buying back shares, as well as showing consistent gains in subscribers, ever since the Great Recession. It also doesn't hurt that car sales have been strong -- and many cars come with Sirius automatically installed.

But the company seems to always have its fair share of doubters. Those folks point toward the growing presence of Pandora in both homes and cars across the country. And if that wasn't enough, the fact that Apple just threw its hat into the ring with its iTunes radio only added fuel to the bearish fire.

Zynga
Finally, we have the social-media game-maker that everyone loves to hate. On the whole, 2013 has been kind to shareholders, with the company's stock up 50%. But since March of last year, the stock is still down more than 75%.

Though the volume of shares sold short has come down, it's still easy to see why some have doubts about this company's long-term prospects. Not only has the executive suite been a mess, but the business of online games relies upon hit after hit being produced before gamers tire and move onto the next big title.

Get the big movers before Wall Street does
Of course, it would have been nice to buy shares of Sirius back when they were only $0.05 per share -- but we don't have the benefit of hindsight in real time. What we do have here at The Motley Fool, however, is David Gardner, founder of the No. 1 growth stock newsletter in the world. And he wants to share a few of his favorite growth stock superstars, with you. It's a special free report called "6 Picks for Ultimate Growth." I personally own two of these six stocks. Just click here for instant access to a whole new game plan of stock picks to help power your portfolio.


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