Since everyone loves a winner, it's reasonable to assume that everyone hates a loser -- everyone but short-sellers, at least. These contrarian investors bet that hot stocks are primed to fall, aiming to turn their pessimism into potential profits.
These companies on the New York Stock Exchange had some of the largest percentage increases in shares short. Combining that with the collective intelligence of Motley Fool CAPS, we'll see which of these companies Fools believe have the power to make short work of short-sellers.
Shares Short Nov. 30
Shares Short Nov. 15
CAPS Rating (out of 5)
Sources: wsj.com. Share counts in millions.
Of course, this isn't a list of stocks to buy -- or short! These stocks could have serious problems that warrant their short interest, but they might also be stricken by short-term troubles. Only Foolish due diligence will tell you for certain; our 180,000-strong CAPS community offers just such a good place to start.
Stay hungry, my friends
From the in-and-out Dunkin' Donuts shops to the more lie-back-and-relax style of Starbucks
Coffee represents some 45% of Hortons' revenues, and with espresso consumption rising 2% annually in Canada, it needed this expansion, particularly with the margins such coffee holds. Problem is, some anecdotal evidence suggests that Tim's quality seems to be a hit-or-miss proposition, so there's no guarantee of success.
I regularly go to four locations and the quality of food and speed of service is very consistent between these locations. Probably because they have great friendly people at each location, even startups. They also continue to develop their menu with interesting choices for lunch and breakfast, plus they have a nice seasonal change in their menu. Plus they are adding Coldstone ice cream service to many locations, so you have a reason to stop for an evening treat.
Add Tim Hortons to your watchlist to see whether it can fend off tougher rivals wanting to tap the hot Canadian coffee market.
Bonding with shareholders
Chemical and oil refining specialist LyondellBasell Industries recently declared a special $4.50 dividend while also raising its regular dividend 25% to $0.25 a share. Its profits in the third quarter soundly beat analyst expectations after nearly doubling as higher crude prices and better efficiencies helped revenues jump 29% to $13.3 billion.
That's not a bad turnaround for a company that emerged from bankruptcy just last year. Although some analysts are looking for chemical companies like Dow Chemical
With CAPS All-Stars unanimous in their opinion that the specialty chemical company will outperform the market averages, it seems the shorts may be misguided in their attack. The stock may be up more than 40% from recent lows, but it's still below its 52-week peak, and at just seven times earnings estimates, it trades at a discount to Dow, DuPont
If Lyondell is going to be producing more ethylene, then we may see a concurrent increase in results from Provident Energy, a Canadian producer of natural-gas liquids, including ethane. Third-quarter earnings saw a 10% year-over-year drop in ethane sales volume, but that was due more to the scheduled maintenance project at its Younger extraction plant than to lack of demand.
If other chemical companies follow Lyondell's lead, Provident stands to gain, as its Redwater plant is the only one in western Canada that can fractionate a high-sulphur ethane-plus mix. With a monthly dividend that currently yields 5.7%, the NGL specialist becomes an even more attractive portfolio candidate, but CAPS member okiedivot worries about the payout ratio, which is exceedingly high. With the company paying more out to owners than the free cash flow it takes in, Provident has little breathing room in the event of a downturn.
You can tell us on the Provident Energy CAPS page or in the comments section below whether this seems to be a problem to you, too, and then see what happens by adding it to the Fool's portfolio tracker.
Don't sell yourself short
Share your views with the CAPS community: Squeeze 'em till it hurts, or short 'em till the sun don't shine?
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Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of McDonald's, Starbucks, and Tim Hortons. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.