Q4 Comebacks: The Tim Tebow Of Stocks

Includes: F, GM, GMCR, S
by: Brian Nichols

Tim Tebow is a polarizing character whose leadership and ability to win demands the attention of football fans across the globe. He is arguably the best college football player to ever play the game, and is one of the most decorated. Tebow's won two national championships, one Heisman, and was a first-round draft pick by the Denver Broncos.

Despite his many accomplishments, he has many doubters as well. And those doubters will argue that he only performs well in the fourth quarter and performs horribly during the previous three quarters of the game. Therefore his legacy now remains a great, decorated college football player who is a great leader that simply wins, yet only performs during the fourth quarter. Therefore I ask the question: Which stock is the Tim Tebow of the market that could outperform during the fourth quarter?

To be like Tebow, a company must have a decorated past as one of the most dominating companies in a respected industry. A company must have a high level of interest and intrigue if it wants to be like Tebow. It must have doubters and those who truly believe and are willing to hold the stock and defend the company against the naysayers despite all obstacles.

Yet the most important characteristic that a company must have in order to be like Tebow is strong leadership, and an ability to perform during crunch time. And since we are now in crunch time -- with investor pessimism at an all-time high -- which companies can come out stronger and make investors buy, despite global uncertainty, then ultimately return gains?

I have found four companies that I believe could possibly hold the title, and recover from their lows with strong performance in the fourth quarter: Green Mountain Coffee Roasters (NASDAQ:GMCR), Sprint Nextel (NYSE:S), General Motors (NYSE:GM), Ford Motor Co. (NYSE:F). After looking through several companies, I believe these four are the stocks that mirror Tebow, and below I have included my reasons why, and if any of these companies can perform well during the fourth quarter.

Tim Tebow's had to deal with a lot of adversity, including questions regarding his throwing motion and his ability to succeed in the NFL. Green Mountain Coffee Roasters has dealt with questions as well: its accounting practices, and if the company can continue to grow considering its high supply levels. Both Tebow and GMCR have a large number of followers and those who believe in future performance, but just as many who are betting on failure. And while Tebow was building a legend in Florida, GMCR was returning a 1,350% gain, and from 2004 till September of 2011 GMCR returned more than 6,000%, which earned it the title as one of the best performing stocks.

GMCR overcame obstacles during the recession and returned a 140% gain while most stocks were trending lower. The stock has recently dropped by nearly 50% after a missed earnings report and skepticism regarding the speed of its growth. Therefore, to determine if GMCR is the Tim Tebow of the stock market, the question becomes: Will this company overcome its obstacles and prove its doubters to be wrong, then reverse its trend and trade higher after its fourth-quarter earnings are announced?

In 2007, Tebow was at the top of the sporting world, as he became the first NCAA quarterback in history to both pass and rush for 20 touchdowns. During 2007 he also won the Heisman Trophy, and was named to Sporting News' breakout players of the year. However, the year also had its struggles, as the Florida Gators couldn't capitalize on Tebow's record-breaking year to win the Capital One Bowl against Michigan.

Sprint had a similar year. It traded over $22 a share in June, but as the Gators were losing their bowl game against Michigan, Sprint was losing 50% of its value. Today, Sprint trades with a market cap of $7.3 billion, a near 90% loss since its glory days during the early years of the 2000s. Most would consider Tebow's breakout year to be 2007, while most consider Sprint's fallout year to be 2007. Both Tebow and Sprint have been on top and have been on the bottom. And while Tebow is now having a breakout year by winning games during the fourth quarter, I wonder if this may be the year that Sprint begins to trend higher, with a strong fourth quarter, just like Tebow.

The auto industry is one of the most important pieces of economic growth, much like a quarterback is one of the most important pieces of a winning team. A successful economy needs the auto industry for manufacturing, trucking, and sales jobs. It also directly affects other companies such as The Goodyear Tire & Rubber Company (NYSE:GT), Sirius XM (NASDAQ:SIRI), and even banks.

The auto industry can make or break an economy because of the many companies that it affects with its success or failure. It's very similar to a quarterback, such as Tebow, who has the ability to change a game with his success. Both Ford and General Motors are two of the most heavily debated companies in the market, much like Tebow in the NFL. Regardless of how much either company exceeds year-over-year sales there are always those who are bearish and find some reason why not to buy the industry.

The auto industry is exceeding expectations and is selling vehicles at its fastest rate since Cash for Clunkers, yet its stock continues to drop. The same can be said for Tebow, who does nothing but win yet receives constant criticism. Both Ford and GM have seen days at the top of the market but have now been forced to change its product, with fuel efficiency in mind. And although both companies have made changes, much like Tebow before entering the NFL, and are showing incredible growth, the question that remains is if either company will return gains in the near future and outperform all expectations during the fourth quarter, just like Tebow.

As I said, I believe that all of these companies are similar to Tebow and have a realistic chance to reverse their trends in the fourth quarter. However, I find flaws in all but one of the stocks. Green Mountain Coffee Roasters began to trade lower after negative publicity and then posted its largest loss after announcing quarterly earnings. The only problem is that its earnings were the best in its history, with 90% revenue growth and 180% income growth, which means margins were better as well -- yet the stock still slipped lower. With that being said, I am not sure what GMCR could possibly announce during the upcoming quarter to encourage investors. And since it trades nearly 40x earnings, I'm not sold that it could be the comeback player of the year.

Tebow's got a new coach, and Sprint has a new phone, the iPhone 4S, which is what consumers and investors have been waiting for. The company's been unable to compete with its larger competitors because it hasn't sold the most wanted device in the world. However, now that it has the new iPhone and is working to upgrade its network, I believe it could very likely reverse and post large gains during the fourth quarter.

In a close football game, turnovers are usually the difference, and have been a large contributor to why Tebow's been so successful. The largest factor with Sprint is also going to be its turnover rate or its retention rates now that it has the iPhone. I believe that investors will make their decision on this company by both its ability to retain its customers and its costs. We already know that revenue will most certainly increase but since the company offers unlimited data investors will focus on how the iPhone effects overall costs, and if its costs are maintained, then I believe it could perform well after announcing fourth quarter results. Yet because of the many questions and the events that must take place in order for the stock to rise I believe this limits Sprint to being like Tebow.

GM and Ford are very similar; however, I believe that Ford is the most like Tebow and will post large gains during the fourth quarter. GM will continue to post large year-over-year gains, and is showing continued strength despite its stock performance; however, I'm not sold on a rally until it breaks the ties from the government or until the situation in Europe is resolved, which could be the second quarter.

Ford continues to improve its debt-to-assets ratio and just announced very strong November sales. In addition, the company anticipates continued strength, with a 50% increase in sales by 2015, and it just recently gave investors the ultimate vote of confidence by implementing its dividend. I believe the fourth quarter will provide a comeback in Ford shares, and although it will be a late drive, the company wouldn't be like Tebow if it were any different.

Disclosure: I am long GM, S, SIRI.