The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes and consumer goods editor/analyst Austin Smith discuss topics across the investing world.
In today's edition, Brendan and Austin continue their series "Stocks the Market Hates," in which they discuss stocks with high short percentages. Today, they discuss commercial printer R.R. Donnelley, solar panel maker First Solar, and retailer J.C. Penney. Both Brendan and Austin believe that the short position for R.R. Donnelley is justified because of its high leverage and the fact that it operates in a declining industry with low barriers to entry. Both disagree with the high short positions on both First Solar and J.C. Penney. Brendan thinks First Solar is a hold because of its valuable intellectual property and low cost structure. Austin believes that the short positions on J.C. Penney are misguided because of its impressive cash flow and the hiring of Apple retail veteran Ron Johnson as CEO, which should help the company reinvent its stores.
Austin Smith and Brendan Byrnes have no positions in the stocks mentioned above. The Motley Fool owns shares of First Solar. Motley Fool newsletter services recommend First Solar. 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.