Earnings are the single greatest catalyst for stocks, and in this piece I am looking at five stocks that could see significant volatility with earnings in July, presenting too much risk for me.
#4 Unrealistic Expectations?
Now, the stock is significantly more expensive at 3.15 times sales with a forward P/E ratio of 73; and expectations have slowly crept higher. This is a company that has seen a great deal of subscriber growth, but various analysts including those at Bernstein are saying that subscription growth expectations are now unrealistic.
Therefore, while I do like the direction of this company long-term, I think its gains and valuation present a great deal of risk heading into earnings on July 24, and I would not own the stock.
#3 Several Warning Signs
Like Netflix, Inc. (NASDAQ:NFLX), Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) has seen massive annual gains, up 255%. The company has seen strong gains as coffee prices have hit a 47-month low, but many analysts now predict that this trend will soon reverse, increasing Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR)’s costs.
With very similar growth to Netflix, Inc. (NASDAQ:NFLX), the factor that makes Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) riskier is that 33.9% of its float is short, compared to 20% for Netflix, Inc. (NASDAQ:NFLX). Moreover, insiders have sold about a million shares this year, while buying none. Combined, I view these factors as risky, and would be very careful with this stock.
#2 Keeping My Fingers Crossed
There is no company that I’d like to see crush earnings expectations more so than YRC Worldwide, Inc. (NASDAQ:YRCW). The stock is higher by 330% over the last three months, after the company posted its first operating profit in a decade during its last quarter.