Stocks To Watch Today: Home Depot, Potbelly, Seadrill...

by: SA Stocks To Watch


SA contributors highlight stocks investors should be watching for unusual movement, including their bias (long/short), and a brief explanation of why.

Stocks are listed alphabetically in order of their symbols. The author's name can be found after the name of the stock and his/her bias. Click on a contributor's name to read more articles by that contributor.

Authors follow comments actively, so feel free to ask questions in the comment stream.

Alcoa (NYSE:AA) - short - Bill Maurer

  • While results were good, shares were already trading at 3-year highs.
  • Shares have doubled in past year and are due for a pullback.
  • Shares above upper Bollinger band, and seemed to hit resistance around $15.75.

Alon, USA Energy (NYSE:ALJ) - short - Richard Berger (no position or plans)

  • Alon is a smallcap U.S. refiner and fuels retailer with refinery operations principally in California, Texas, and Louisiana.
  • Shares plunged 6% last June 25th after lowered guidance on weak performance at that time.
  • Since then, crack spreads have declined due to U.S. export restrictions being eased. Today, Barclays slashed ALJ's fiscal 2014 EPS outlook from $0.35 from $1.25 after trading close.

Advanced Micro Devices (NASDAQ:AMD) - long - Sean Chandler

  • Yesterday, the IDC announced that global PC shipments performed far better than previously expected (actual: -1.7% vs. estimated -7.1%).
  • Currently, about 70% of AMD’s revenue comes from the PC.
  • AMD’s earnings is next week Thursday, and I believe that these results could lead the company to a earnings beat.

General Cable (NYSE:BGC) - short - Richard Berger (no positions or plans)

  • General Cable produces and sells aluminum, copper, and fiberoptic cables for the industrial, energy, communications, and specialty industries worldwide.
  • The company has been reeling from poor performance, gapping down last November from a close on the 4th of $34.41 to end the next session at $28.46 (a plunge of 17%) on weak 3rd Qtr. results at the time. Shares plunged again on May 1st from a prior close of $25.62 to $22.97 (14%) on poor 1st Qtr. 2014 results.
  • Wednesday after the close the company slashed guidance and announced a layoff of over 7% of its workforce. Shares can be expected to plunge yet again in trading.

CTC Media (NASDAQ:CTCM) - long - Jordan Flannery (long CTCM)

  • After a brutal 2-day selloff that has sent CTC Media down 8.2%, shares look primed for a rebound in today’s trading session.
  • Renewed concerns over sanctions against Russia have hurt the stock, however CTC Media has experienced strong operational momentum including the July 7th announcement that the company has licensed some of its content to Hulu.
  • See my July 1st Seeking Alpha PRO article titled CTC Media: A Russian Media Play Yielding 6.3% With Strong Licensing Opportunities for more detail on the company and my long thesis.

GSI Technology (NASDAQ:GSIT) – long – Chris DeMuth Jr.

  • GSIT announced a Dutch Tender Offer priced at $6.50-$6.70.
  • At a cost of $6.50 per share, you can tender 99 shares at $6.70.
  • Holders of fewer than 100 shares are not prorated.

Home Depot (NYSE:HD) – short – Paulo Santos

  • Yesterday Lumber Liquidators reported massively disappointing earnings and same store sales. Many investors will take this to mean that the home restoration business is seeing weakness, also affecting Home Depot.
  • Home Depot’s EPS estimates and share price have not yet been affected, so this has not yet been discounted. Home Depot is likely to see selling throughout all day.

Lumber Liquidators (NYSE:LL) - long - Bill Maurer

  • Company reported a terrible second quarter and lowered full year guidance.
  • Shares fell in the after-hours session, following an 8% fall during the day to new 52-week lows.
  • Shorts (15% of the float) may want to take profits with stock down almost 45% year to date.

LogMeIn (NASDAQ:LOGM) - short - Don Dion

  • As Seeking Alpha reported, Independent research firm Off Wall Street launched coverage on LOGM with a Sell and $30 PT on July 9.
  • Off Wall Street argues that LOGM’s core market (remote PC access software) is saturated and user growth has stagnated, following new price hikes.
  • Piper has been defending LogMeIn, putting a positive spin on LOGM's core business new products.
  • LOGM has also rebutted Off Wall Street’s negative coverage, asserting that it's gaining customers and its BoldChat and products are performing well. LOGM dropped 6.6% on July 9 and could see another 2% loss tomorrow, July 10th.

Lowe's Companies (NYSE:LOW) – short – Paulo Santos

  • Yesterday Lumber Liquidators reported massively disappointing earnings and same store sales. Many investors will take this to mean that the home restoration business is seeing weakness, also affecting Lowe's Companies.
  • Lowe's Companies’ EPS estimates and share price have not yet been affected, so this has not yet been discounted. Lowe's Companies is likely to see selling throughout all day.

Lloyds Banking Group (NYSE:LYG) - long - Antonio Carradinha (no position)

  • While fundamentals are strong share prices are consolidating.
  • Investec reaffirms a Buy recommendation for LYG with a price target of 85p ($5.80 per ADR).
  • Probable setup for another move upward today.

Marathon Patent Group (NASDAQ:MARA) - long - Mobile Guru

  • New investor presentation released to gain larger investment audience.
  • New Opus IP analytics platform will now launch in Q3 instead of Q4.
  • Chart primed for next move upward.

Potbelly Corporation (NASDAQ:PBPB) - short - David Zanoni

  • Potbelly, the operator of sandwich shops, reported that it expects a drop in comp store sales of 1.6% for Q2.
  • Despite a sell-off since its IPO last year, the company is still not cheap as it is trading at 32.5 times next year's earnings.
  • Expect Potbelly stock to do a belly-flop drop today.

Potbelly (PBPB) - short - Bill Maurer

  • Company reported Q2 revenues and earnings well below expectations. Full year guidance cut.
  • Stock way overvalued as growth concerns continue.
  • Single digits may come sooner rather than later.

Questcor Pharmaceuticals Inc (QCOR) – short – Chris DeMuth Jr.

  • The arbitrage spread of over $7 equals an annualized return of over 50%.
  • However, it is unclear whether the deal will close. Where is the amended proxy? It is currently almost a month late. Why?
  • There is over a 25% downside in the likely event that the deal breaks. Buyer could be concerned with the insurers’ skepticism towards Acthar.

Seadrill (NYSE:SDRL) – long – Jordan Flannery (no position)

  • After Tuesday’s announced convertible bond offering and yesterday’s cancellation of the offering, Seadrill announced this morning that the company is refinancing three of its UDW rigs with a $1.35 billion credit facility at LIBOR +2%.
  • This lower-cost financing deal for the company should ease investors’ concerns over high leverage and an increased interest expense.
  • Shares of Seadrill are down by 0.6% in Oslo trading.

Select Income REIT (NYSE:SIR) - long - Richard Berger (long SIR)

  • SIR's current RMR-backed management is in a proxy battle with dissent Lakewood for control.
  • After hours, SIR major holder CommonWealth (37%), an assumed Lakewood ally, sold its full interest to an RMR backed group for $31.51/share, a 5%+ premium over market close. After market, SIR plunged to $29.00.
  • Despite the huge setback for Lakewood's fight, the $40.00+ NAV value analysis by Lakewood and the $31.51/share paid for the CommonWealth shares suggest morning traders may run prices back up to at least $31.50.

Silver Wheaton (SLW) - long - Ken McGaha (Long)

  • SLW is highly leveraged to the price of silver.
  • SLW is a royalty streaming business with an average cost of slightly over $4/oz. for the silver they receive through their royalty agreements.
  • SLW shares have established a solid uptrend over the past several months. Gold and silver have moved sharply higher in overseas trading last night.

Viper Energy Partners (NASDAQ:VNOM) - long - Don Dion

  • The 25-day quiet period on underwriter research for VNOM will expire on July 12, allowing the firm's IPO underwriters to publish research reports on July 13.
  • In anticipation of positive analyst reports, share prices often rise two days before the quiet period expiration.
  • VNOM's IPO priced well above its expected range, saw an impressive 24.4% first day return, and has since bounced between $32 and $34 per share.
  • While domestic oil companies remain more stable bets than their foreign counterparts; we recommend VNOM as a Buy. Additional details here.

Waddell & Reed Financial (NYSE:WDR)- long - Brad Kenagy (no position or plans)

  • Waddell & Reed Financial was down 3.37% today because the company filed an 8-K noting that the portfolio manager for the high income suite of funds Waddell & Reed offers was terminated.
  • The reason for the termination according the filing was “for 'cause' as set forth in his employment agreement. The Company indicated that Nelson’s termination was unrelated to his portfolio management responsibilities.”.
  • This appears to be an overreaction if the manager's firing had nothing to do with his portfolio management responsibilities, and with the stock currently sitting above a horizontal level of support that has been in place since November 2013 WDR could see a bounce higher.

Zumiez (NASDAQ:ZUMZ) - long - Bill Maurer

  • Company announced strong June sales and raised Q2 guidance.
  • Finding retailers that are performing well currently can be difficult.
  • Further upside possible as estimates and price targets raised.

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