The following is a list of two stocks with bearish momentum, rising accounts receivables and insider selling. If you're looking for short ideas, this might offer an interesting starting point.
For this article, we'll focus on the convergence between the 50-day and 200-day moving averages. When these two moving averages cross, it often represents a shift in investor sentiment. If the 50-day MA moves above the 200-day MA (bullish), it's called a "Golden Cross" signal. If, on the other hand, the 50-day MA crosses below the 200-day MA (bearish), it's called the "Death Cross."
Both stocks mentioned below have recently seen the SMA50 move below the SMA200 (a bearish signal).
Insiders don't seem too enthusiastic either--both companies have seen insider selling over the last two years.
In addition, these companies have seen accounts receivable grow faster than revenues during the most recent quarter--an accounting trend that deserves closer attention.
Sometimes, problems with accounts receivable simply indicate a change in the business (like an acquisition), or a lazy collections department. However, extreme differences between accounts receivable and revenue can also suggest a desperate company that's trying to boost sales by giving its customers overly generous payment terms.
Does this mean the customers of the companies mentioned below cannot pay their bills? Or are they withholding payments? Given these fundamental trends, are these companies due for a correction?
Of course, there may be several explanations for these accounting trends. Please use this list as a starting point for your own analysis - check out the 10-Q and related management discussions to find out more.
Financial data sourced from Google Finance, insider data sourced from Fidelity, short float and performance data sourced from Finviz.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.
1. Marten Transport Ltd. (MRTN):
Trucking Industry. Market cap of $463.36M.
Accounts Receivable: MRQ Revenue grew by 6.10% on a y/y basis, while accounts receivable grew by 28.58%. Accounts receivable, as a percentage of current assets, increased from 68.40% to 73.04% (comparing 3 months ending 2009-12-31 vs. 3 months ending 2010-12-31).
Moving Averages: SMA50 at $21.42 vs. SMA200 at $21.63 (current price at $21.24).
Insiders Average: Insiders sold an average of 59,829 shares per year over the last two years.
Other Sentiment Data: Short float at 2.58%, which implies a short ratio of 4.66 days. The stock has gained 20.08% over the last year.
2. Black Hills Corporation (BKH):
Electric Utilities Industry. Market cap of $1.21B.
Accounts Receivable: MRQ Revenue grew by 17.08% on a y/y basis, while accounts receivable grew by 24.49%. Accounts receivable, as a percentage of current assets, increased from 37.20% to 40.28% (comparing 3 months ending 2009-09-30 vs. 3 months ending 2010-09-30).
Moving Averages: SMA50 at $30.54 vs. SMA200 at $30.58 (current price at $31.25).
Insiders Average: Insiders sold an average of 31,400 shares per year over the last two years.
Other Sentiment Data: Short float at 15.17%, which implies a short ratio of 13.27 days. The stock has gained 18.89% over the last year.
Recent Developments: Announced closing a $100M term loan agreement (Dec. 2010).