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Tesla Motors Inc (TSLA), Netflix, Inc. (NFLX): Four Stocks I Don’t Want to Own in July

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.

Tesla Motors Inc (NASDAQ:TSLA)

#4 Unrealistic Expectations?

Netflix, Inc. (NASDAQ:NFLX) is one of the market’s “cult stocks,” a very volatile name that has rallied 250% over the last year. During its last quarter, the stock surged more than 25% after beating expectations and posting top-line growth of 17%.

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

Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) and Netflix, Inc. (NASDAQ:NFLX) are joined at the hip, despite trading in two different industries, as bullishness for one often reflects well on the other. Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) is yet another cult stock, meaning it’s a stock where irrational exuberance often occurs abruptly and without warning. For this reason, you have to be worried into earnings on July 29.

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.

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