The week leading up to the summer's most important holiday can be a slow period for the stock market, but this is shaping up to be a crazy week. With riots in the streets of Athens, early humming from US presidential candidates and the commodities markets still shocked from the release of oil from the SPR amid an already technically weakened market, there is a lot to follow.
Here are some story stocks that investors should not ignore. Following this weekend, these stocks could continue to be in the headlines.
Youku.com Inc (YOKU)
The Chinese internet video platform is commonly known as the "YouTube of China." The stock had a HUGE day, rallying 30% on news that they signed a licensing agreement with Warner Brothers to offer video on demand movies to Chinese internet users.
Since going public in 2010, YOKU has seen a massive jump in short interest. In the last six months, from 12/15/2010 to 6/15/2011, short interest increased from 1,383,185 shares to 11,520,300 shares. While the licensing agreement is undeniably positive for the company, today's stock price was also likely fueled by short covering and persistently negative sentiment. Before today's rally, the stock was trading right at its 52 week low.
Chipotle Mexican Grill, Inc (CMG)
The company operates a chain of Mexican fast food restaurants throughout the US as well as in Canada and the United Kingdom. The stock rallied 1% today on modestly below average trading volume but the company is notable because it breached its 52 week high in intra-day trading. The company is not cheap based on traditional metrics. CMG trades at a trailing P/E of 51.55 and a forward P/E of 36.19, but with around 1,000 restaurants, bulls think the popular chain has a lot of room to grow. Just as a basis for comparison, McDonald's has 32,478 locations worldwide, Wendy's has 6,576 locations worldwide and Jack in the Box operates 2,200 locations worldwide in addition to their 500 Qdoba Mexican grill restaurants.
Renren Inc (RENN)
The Chinese social networking company is often referred to as the "Facebook of China." The stock jumped 8.5% today on around 1.5x normal trading volume. The stock price rally is likely being driven by the big move in YOKU, the overly bearish sentiment among Chinese stocks and the company's large short interest. The stock is among the new lineup of hot, high priced IPOs. The valuation is based largely on the company's growth potential rather than its proven results.
YRC Worldwide Inc (YRCW)
The trucking company's stock returned to Earth today after an unbelievable trading session on Monday. As we mentioned before yesterday's meteoric rise was not grounded in a fundamental headline catalyst and as such, we are not surprised by today's stock price weakness amid an otherwise broad based bullish day in the stock market.
The stock is an interesting way to invest in a Fortune 500 company with upside. Still, we urge investors to exercise caution. If the company successfully enacts its plan of reorganization then current equity is priced roughly in line with competitors, but this does not include the real possibility that the company will still have to seek bankruptcy protection in the future.
Monster Worldwide (MWW)
The online professional networking company's stock rallied 9.80% on 2x normal trading volume today following their launch of a new application on Facebook called BeKnown. In addition to this interesting catalyst, the company has tremendous upside leverage to any recovery in the US economy. Even after today's move the company still trades well below the previous 52 week high of $25.90. The company is a cyclically sensitive stock. In 2008, the company generated $1.34 billion in sales. While sales will likely rebound along with employment in the US, investors cannot ignore the threat from new competitors like Twitter.
SGOCO Group Ltd (SGOC)
The Chinese based micro cap stock designs and manufactures LED and LCD products. The stock was up nearly double on more than 40x the normal trading volume following issuance of their financial results for the first quarter ending March 31, 2011. The company will host a conference call at 10am ET on June 29, 2011.
iSoftStone Holdings Limited (ISS)
The Chinese based company provides information technology consulting and solutions. Founded in 2001, the company has around 9,000 employees. The stock rallied more than 12% today on 1.5x normal trading volume. The company did not have any notable positive headlines and the stock's rally likely occurred in sympathy with the bullish YOKU headlines.
The company is very popular among smart money investors. Notable shareholders include: Lone Pine Capital, Goldman Sachs, Soros Fund Management and Columbus Circle Investors. Lone Pine recently increased their position to 7.3% of the total shares outstanding.