With earnings season now in full swing, it's not unusual to check your portfolio and see a number of stocks making huge moves. Usually, it's impossible to tell which stocks will be making such swings, but this week, I've identified three companies that should show an outsized level of volatility.
That's because all three stocks are reporting earnings, and all three are heavily shorted -- or have lots of people betting against their short-term success. When these two variables collide, big moves are almost always the result. For proof, check out the three stocks I highlighted last month, which moved an average of 17% following their quarterly release.
But I don't think investors should try to profit from these short-term moves. There's no telling if these stocks will go up or down -- and it's not a very (capital-F) Foolish way to invest. Instead, I think current shareholders of JC Penney (NYSE:JCP), Papa Murphy's (NASDAQ:FRSH), and Wayfair (NYSE:W) should check out the slideshow below to prepare themselves for the week ahead.
Brian Stoffel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.