It's never a good idea to time the market. Study after study has proved that it's fatal to your wealth, and if you've ever tried it, you can probably attest to that fact.
That's an important message to get clear before diving in; otherwise, this article could easily be misconstrued to encourage timing the market. That's because it will introduce two stocks that -- because they are both heavily shorted and are coming out with earnings -- will very likely make big swings this week, when they report earnings.
In reality, this article is for shareholders in these two companies -- to better prepare you for the volatility that lies ahead. Brace yourself for big moves, and make sure you have a clear head before making any buy or sell decisions.
To help you get ready, here's what you should be looking for.
|
Company |
% of Shares Short |
When? |
Expected Revs (Millions) |
Expected EPS |
|---|---|---|---|---|
|
Criteo S.A. (CRTO +3.38%) |
14% |
Tuesday |
$78.3 |
$0.12 |
|
Advanced Micro Devices (AMD +1.64%) |
15% |
Friday |
$1,300 |
$0.00 |
Source: E*Trade, finviz.com
Source: Criteo
Criteo is a newly IPO'd company with headquarters in France, and operations all around the world. The best way to describe Criteo to someone who has never heard of it before is that it tries to deliver targeted advertisements on the Internet via proprietary algorithms.
There are lots of reasons for Criteo to have as many people shorting its stock as there are. For starters, the company is trading for over 1,000 times earnings, and over 500 times free cash flow. That being said, most young companies in Criteo's field can't even claim profitability or positive free cash flow. And, Criteo was able to grow revenues by 63% -- and earnings by 68% -- last year alone.
Another probable reason for the high short-ratio is that as of March 14 -- the last time it was measured -- only one quarter of Criteo's shares were on the public market. Insiders held the rest.
Since then, Criteo conducted a secondary offering, so it will be interesting to see if investors remain as bearish on the stock after earnings come out.
Source: Advanced Micro Devices.
AMD is one of the world's largest semiconductor businesses -- focusing on both computing solutions, as well as graphics and visual solutions.
Over the past year, shareholders in AMD have enjoyed a 52% bump in the stock's price, but much of that came in May of last year, when analysts began predicting promising results from AMD's gaming chips in new console systems.
The key thing for new investors to keep their eyes on is how the company performs -- and how management thinks it will continue to perform -- in the gaming and cloud spaces. AMD is in the middle of a major transition away from PCs and toward these two areas, so keep your eyes and ears open for details on these two fronts.
