3 Small Stocks That Should Make Huge Moves This Week

Three key variables are coming together for the perfect store of volatility.

Mar 23, 2014 at 8:00AM

Two weeks ago, I pointed out three tiny companies I thought would make huge moves. Over the course of the next week -- on the specified day -- those stocks averaged moves of 12%.

Is this evidence that we here at The Motley Fool possess a crystal ball? Though I'd like to think so, the honest answer is, decidedly, no.

Instead, all three of these stocks shared three key characteristics: They are comparatively small companies, they have lots of investors betting against, or shorting, their short-term future, and they reported earnings. When these three variables combine, wild swings, up or down, are highly likely.

So does this mean we encourage using these short-term movements to try and time the market and make a quick fortune. Again, the answer is decidedly "no!"

Instead, these articles hope to prepare investors, especially beginners, for wild swings in their stocks in the coming week. This week, I've identified three more stocks that are primed for big moves: lululemon athletica (NASDAQ:LULU), GameStop (NYSE:GME), and Lindsay Corporation (NYSE:LNN).


% of Shares Short


Expected Revenue (Millions)

Expected EPS
















Sources: Finviz.com, E*Trade.

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Source: Wikimedia Commons.

Lindsay Corporation, which makes center-pivot irrigation systems like those seen in the photo, is no stranger to this list. Last year, the company was also heavily shorted and came out with earnings that disappointed investors and sent the stock down 6%.

Zooming out a bit more, shares of the company are down about 13% over the past year -- though investors are now benefiting from a dividend that's twice the size now than it was just one year ago.

The main reason so many are shorting the company's stock is that there are two things happening that are generally good for everyone but Lindsay. Last year, drought stayed away in the Midwest, and crop prices were lowered on record yields. When that's the case, farmers both have less need, and less money, to buy Lindsay's irrigation products.

Pay close attention to the company's estimates to get a feel for what 2014 could hold in store. And remember, despite our best efforts, weather predictions over any one year are impossible to forecast with 100% certainty.

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Coming out of the Great Recession, Lululemon was the market darling that defied all expectations. Growing in popularity based on a unique advertising model and a mission that seemed to reach far beyond simply making profits, the company's stock boomed 2,700% between March 2009 and last July.

But then, a series of missteps caused it to draw the public's ire. First, the company's popular brand of luon pants had to be recalled for being ... well ... see-through. Then, founder and then-board member Chip Wilson blamed the recall on women who were too heavy to be sporting Lulu gear. Obviously, that didn't go over too well. And finally, popular CEO Christine Day announced her resignation in late 2013.

Since then, the company has gotten former Toms Shoes exec Laurent Potdevin to come on as CEO. Investors will be watching closely to see what moves Potdevin and the company make to reverse their fortunes -- though Fools should remember that it usually takes more than one quarter to right the course of a company that's gotten a little lost.

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It shouldn't come as too much of a surprise to see GameStop in short-sellers' crosshairs. Increasingly, video game companies are migrating their business models to the cloud, instead of relying on the purchase of physical games in stores. That ruins GameStop's original business model.

But those who have bet against GameStop over the past two years have suffered for it. Last year alone, the stock surged almost 130% through November, and started paying a hefty dividend.

But the writing may already be on the wall. Both Sony and Microsoft have subscription services that are gaining users, and that could be the beginning of the end game for GameStop.

Don't focus on the next week -- focus on the next decade
As I mentioned, this article isn't to encourage you to time the market. Get-rich-quick schemes aren't what we're about here. We believe we deserve to buy companies we feel comfortable owning for a lifetime.

You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Brian Stoffel owns shares of Lululemon Athletica. The Motley Fool recommends lululemon athletica and owns shares of GameStop, Lindsay, and Microsoft. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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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