Secondly, even with H&R Block’s expansion into tax preparation software, it’s light years behind Intuit Inc. (NASDAQ:INTU) with its TurboTax do-it-yourself software. Just 5% of all taxpayers still paper-file, leaving H&R Block scrambling to close underperforming brick-and-mortar locations and retrieve some of the market share lost to Intuit over the past couple of years.
Finally, where’s the value? Wall Street’s estimates call for sales growth of just 3% over the next year, yet H&R Block is already trading at 15 times this year’s estimates. I’d say this is a stock that short-sellers should be drooling over.
A steal of a deal?
I always have to wonder what’s going on in the minds of short-sellers when they willingly bet against conglomerate General Electric. Outside of its finance arm, which is nearly back to full strength again, GE is running on all cylinders and daring short-sellers to stand in its way.
Last week, GE announced that it’d be selling its remaining stake in NBC Universal to Comcast Corporation (NASDAQ:CMCSA) for $16.7 billion. The deal looks like a win-win for both parties, even if investors feel that Comcast got away with purchasing the remaining stake of NBC Universal on the cheap. The deal allows Comcast, which had been seeing above-average results from its stake, to realize 100% of NBC Universal’s revenue. In the fourth quarter, NBCU’s sales rose 4.8% and EBITDA rose 11% to $1.17 billion. Extrapolated out, Comcast paid less than four times EBITDA for NBC Universal, a veritable steal.
For GE, the added cash gives the conglomerate ample opportunities to make acquisitions as well as help fund its aggressive share repurchase plan, which will ultimately add value to shareholders by boosting EPS and making the company appear cheaper from an earnings perspective. GE’s industrial organic growth shot up by 8% in its most recent quarter, and it’s expected that GE will see huge demand for wind- and alternative-energy-based products over the next decade. Short-sellers, consider yourselves warned!
Foolish roundup
This week we’re focusing on the continuation of trends. GE and Lorillard have been building market share and taking care of investors nicely over the past few years while H&R Block has been backpedaling and trying to regain the market share it lost to Intuit.
What’s your take on these three stocks? Do the short-sellers have these stocks pegged, or are they blowing smoke? Share your thoughts in the comments section below.
The article Shorts Are Piling Into These Stocks. Should You Be Worried? originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Motley Fool newsletter services have recommended buying shares of Intuit.
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