1 Stock That Could 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.

We Fools aren't crazy about getting too worked up over short-term moves in the stock market. As Warren Buffett once opined, we should buy companies that—if the stock market was shut down for 10 years—we'd be perfectly happy to hold.

But it's also worth acknowledging that we are human—which means recognizing that, try as we might, short-term movements could effect us, and cause us to hit the "Buy" or "Sell" button without taking a breath to think about what we're doing.

When a stock is heavily shorted—or has lots of investors betting against it—and is coming out with earnings, we are well served to prepare for outsized movements. Two weeks ago, the five stocks singled out  for big movements had price swings averaging 12% following its earnings release.

But this week, because of the holiday season, there's only one company worth preparing for: irrigation specialist Lindsay (NYSE: LNN  ) .

Just the Numbers
Though it's far from telling the whole story, there are a few easy metrics to keep your eye on when Lynn reports earnings before the market opens on Friday.

% of Shares Short

Expected Revenue

Expected EPS

26%

$142 Million

$0.89

Source: finviz.com, E*Trade

If the company were to meet expectations, it would actually represent a revenue decrease of 3.4% and an even-steeper 23% decline in earnings.

That helps explain part of the reason while over one-quarter of all shares are being shorted, but there's even more to the story. The company is a global leader in mechanized irrigation, especially center pivot irrigators, like that seen below.

 

Because of record-high yields in corn over the past year, the prices for the future contracts on the crop have fallen. That has led many analysts to assume that farmers would have less cash on hand to pay for new irrigation systems or upgrades.

But as fellow Fool Jim Mueller recently noted —in buying shares of Lynn for his real-money portfolio—such concerns may be shortsighted. Over the next 40 years, the global population is expected to grow by about 2 billion people, and water usage will be pinched evermore. That's why Lynn's irrigation systems—which are slightly more expensive than gravity irrigation but use less water and are far more efficient at improving yields—could be so important over the long run.

So if you own Lindsay shares, and the company disappoints with earnings this year, be sure to keep your eye on the long-term horizon before making any rash decisions.

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  • Report this Comment On December 29, 2013, at 3:17 PM, shineridge wrote:

    Forget FRAUD STREET. The market is RIGGED !!! Buy GOLD !!!!!!

  • Report this Comment On December 30, 2013, at 12:00 AM, WCoastGuynCA wrote:

    "AMBS" - Amarantus Bioscience - Currently trading under a dime. Developing diagnostic test with Becton Dickinson to detect early stage Alzheimer's. Twitter: @AmarantusBio

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