It's no secret that we Fools are a buy-to-hold, long-term-investing bunch. We don't like trying to time the market, or anticipate huge one-day swings. But the fact is, we're still human. Seeing our stock plunge or skyrocket in just one day can still lead us to consider the unthinkable: making investment decisions based on emotion (gasp!).
To prevent such a calamity, it's worth preparing when some of our community's favorite stocks -- which are also heavily shorted -- report earnings. This week, the following three companies are reporting earnings, and because there are lots of investors betting against their short-term success, huge moves are likely to be in the offing.
|
Company |
% of Shares Short |
When |
Expected Revenue (Millions) |
Expected EPS |
|---|---|---|---|---|
|
Potbelly (PBPB +0.00%) |
15% |
Wednesday |
$88 |
$0.04 |
|
Tesla (TSLA +2.96%) |
36% |
Thursday |
$663 |
$0.19 |
|
MannKind (MNKD +3.27%) |
23% |
Thursday |
$0.433 |
$(0.17) |
Sources: E*Trade, finviz.com.
Potbelly
This neighborhood sandwich and sub shop saw its stock burst after going public last October, but since then, it hasn't been a pretty ride for investors. After topping out at a little over $32 per share, the stock has fallen more than 30%.
The interesting thing about Potbelly's slump is that it's actually done quite well in matching analyst expectations as a public company.
It seems the real concern has more to do with simple valuation than anything else. The company is expected to pull in $0.38 per share in 2014. At today's prices, that means it's trading for almost 60 times earnings. For a chain that has shown same-store sales jump just 1.8% so far this year, that's very expensive
Tesla Motors
Tesla might be one of the most hotly debated company's and stocks of the past few years. What was once an unprofitable company that was the butt of every joke is now selling electric cars much faster than anyone could have expected. Those who were willing to cast their lot with CEO Elon Musk have been rewarded, as shares have surged 420% over the past year alone.
But with such success, and pops in one's stock price, come the eventual short-sellers; and in Tesla's case, there are a lot. The company revealed last month that its sales would come in well ahead of guidance, and China recently changed some of its policies to become more EV friendly.
The stock now trades for 125 times expected 2014 earnings. Many would argue that this assumes the absolute best-case scenario and that there's little upside potential. Stay tuned to the company's guidance for the rest of the year to see if that's the case.
MannKind
MannKind is a biopharmaceutical company that has put shareholders on quite the roller-coaster ride over the past decade. More recently, however, the news has been good for investors, as shares are up 130% over the past year.
The key for the company moving forward hinges on the results of an FDA advisory committee meeting on April 1. MannKind's next potential blockbuster is Afreeza, an inhalable insulin treatment for those suffering from diabetes.
But the drug has been turned down twice before, and for the company to come anywhere near creating the type of revenue to justify a $1.7 billion market cap, Afreeza needs to produce. Though the really big moves will likely occur when the FDA rules, it's still worth listening into the conference call to see what management has to say about potential approval.
