5 Stocks That Will Probably Make 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.

The list I'm going to share really shouldn't matter too much if you're a long-term, buy-to-hold investor. We know that one quarter's earnings does not a company make. At the same time, it's worth noting that we're all human, and if we see one of our stocks up or down by huge amounts, it can cause an emotional reaction.

Consider this article a chance to prepare for that emotional reaction.

Every week, I publish a list of stocks I believe will make huge moves in the coming trading days. I get this list by looking for highly shorted stocks that are reporting earnings. Last week's picks proved eerily true, moving an average of 12% the trading day after quarterlies were made public.

Here are the five stocks to look for this week.

Stock

% of Shares Short

When

Expected Revenue (in Millions)

Expected EPS

Smith & Wesson (NASDAQ: SWHC  )

30%

Wednesday

$138

$0.21

Avanair (NASDAQ: AVNR  )

12%

Wednesday

$22

($0.07)

Joy Global (NYSE: JOY  )

18%

Wednesday

$1,100

$1.11

Ciena (NYSE: CIEN  )

18%

Thursday

$568

$0.24

lululemon athletica (NASDAQ: LULU  )

25%

Thursday

$376

$0.41

Sources: Finviz.com, E*Trade.

Smith & Wesson
Smith & Wesson is one of America's largest manufacturers and sellers of firearms. Shareholders in the company have experienced a solid 2013, with the stock trading 45% higher than it was on Jan. 1. Expectations, however, have been damped down lately. The stock trades for just 9 times earnings, but even that may be optimistic in light of slowing gun sales across the entire industry.

Avanair Pharmaceuticals
Avanair's immediate future depends on the success of Nuedexta, the company's drug for the treatment of pseudobulbar affect -- which manifests itself in uncontrollable fits of both crying and laughter. For most of the year, investors were treated to great returns. Starting in September, however, questions started to arise after Gravity Research posted a bearish report alleging the company had taken part in illegal off-label marketing of Nuedexta and was in dire straits financially.

Joy Global
Joy Global provides heavy machinery used by mining companies worldwide. Things haven't been going to well for the company or its shareholders: shares are down 15% this year. Even if Joy meets expectations, earnings and revenue will have fallen 46% and 31%, respectively. The main culprit is the fact that capital spending in the mining industry is lagging, and coal -- which Joy's equipment is specialized to mine -- is especially out of favor at the moment.

Ciena
Ciena provides communications networking equipment for use by telecommunications and cable companies. So far, 2013 has treated investors mighty well, as shares are up 50%. What that hides, however, is that shares are down 15% since late October. The most likely reason shorts are piling in has to do with weak guidance offered up when networking bellwether Cisco reported earnings in November.

lululemon athletica
Finally we have everyone's favorite retailer of athletic apparel for -- primarily -- women. Lulu was one of the hottest companies around coming out of the Great Recession, but a series of missteps have hurt the company's reputation. First, there was a case of the company's luon pants that were too sheer -- read: see-through. That was followed by the announced resignation of CEO superstar Christine Day. And if that weren't enough, there are reports surfacing that Lulu's pants might be showing a little too much once again.

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Read/Post Comments (3) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 08, 2013, at 9:52 AM, ramblingfools wrote:

    Regarding Avnr... The pending litigation about to be ruled on by Judge Stark is going to have a huge upward impact on the stock. Who is Gravity Research... A company created to write an article to bash avnr? Do some digging, Avnr is a prime example of how small caps get manipulated.

  • Report this Comment On December 08, 2013, at 1:46 PM, WCoastGuynCA wrote:

    You failed to mention Amarantus Bioscience, AMBS, which is starting an up trend for a major move higher. The company's patented drug, MANF, could be worth billions as a potential treatment for a myriad of diseases. Due diligence.

  • Report this Comment On December 10, 2013, at 8:43 AM, BioBat wrote:

    Lulu's reputation has only been hurt amongst Wall Streetsters and not the people actually buying the apparel. Remember how bad atennagate was for the iPhone? Yeah, that's right. It wasn't.

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