5 Stocks To Watch On Thursday And Friday

Includes: AAPL, F, KCG, S, XPO
by: Brian Nichols

After an incredible three-month rally, that took the markets to multi-year highs, all major indexes have since traded lower during the last two weeks. Every so often, a pullback can be healthy for the market, and can provide investors with good opportunities to buy. The five stocks listed below have pulled back over the last few days, and are now worth watching. I am not suggesting that any of these five stocks will trade higher in the next two days, but are worth watching for future movement due to recent performance and various developments.

Knight Capital (NYSE:KCG) has lost more than 75% of its value over the last three months, thanks to its trading glitch that cost the firm $440 million. However, on Wednesday the stock rallied to trade higher by 9%, as one of the best performing stocks of the day. I actually found this performance to be atypical: on Tuesday, CNN reported a significant decline in trading volume for the firm. In addition, high frequency trading has been a hot political topic throughout the last week, meaning I would expect the stock to trade lower. However, it has been negatively affected by the negativity surrounding its core business model, and is oversold to a large degree. Therefore, its 9% rally is most likely a bounce off the bottom, but with KCG being a closely watched stock, it is possible that its rally could continue for several days in a row. As a result, investors/traders should watch and monitor its performance, as with today's rally it could very well continue to trade higher throughout the remainder of this week.

Shares of auto company Ford Motors (NYSE:F) have fallen by nearly 6% over the last five days. On Wednesday, it dipped below the crucial $10 price, after exceeding $10 earlier this month. This particular price had been a difficult point of resistance for the company, as it had not been able to reach the price since June. However, after opening below $10 ,the stock then rallied and trended higher before falling to close at $10.01. Therefore, Ford will be an interesting play, because if investors feel there is strong support it is likely that more will invest into the undervalued company. It's trading with a P/E ratio of just 2.28 and is one of the bright spots of the economy. Yet for some reason, the market has been slow to buy the promise of this company. But if $10 proves to be a new bottom, then watch out, because with its valuation this stock could rally very quickly.

Apple (NASDAQ:AAPL) is the closest watched company right now in the market. Last week, the company launched its iPhone 5, and expectations for the device were in great demand. The company sold two million phones in just 2 hours during pre-orders. Therefore, analysts and investor expected its opening weekend to sell anywhere between 6 million and 10 million units of the device, but what we didn't account for was the supply.

Apple announced that it sold five million units of the iPhone 5, and its stock has slid ever since. The stock is now $40 off its high, earlier this week, and if you take a moment to look at stocktwits.com, everyone is trying to play its bottom. The first guess was $680, then $675, and when it broke through $670 people really started to panic. The fact is that if Apple would've had 10 million units, it probably would have sold 10 million iPhones. The market is still anticipating several product launches in the coming months and the stock is now trading at the same price as it was the day of its launch. I think it is a stock now worth watching. The stock fell to a low of $661.20 and then quickly reversed and maintained a price around $665 throughout most of the day. There are still so many people ready to buy, waiting on the bottom, and once it's realized this stock could reverse very quickly. Personally, I can't see it falling below its pre-launch price, I think investors will see the value, both short and long-term. Therefore, Apple could begin its trend higher on Thursday, making it a stock worth watching.

After reaching new highs on Monday, shares of Sprint Nextel (NYSE:S) have traded lower with Apple, dropping about $0.30 from its high. I've been bullish on Sprint throughout the year and I still believe the company has a great deal of upside. However, I was surprised to hear rumors that Sprint still had some iPhone 5s in stock. Much of its rally has been a result of anticipation for this new device, therefore, I'm surprised it hasn't sunk lower with sales being below expectations. Either way, the company is still selling a large amount of product, and is improving fundamentally with subscriber and revenue growth. This will be an interesting stock to watch as it typically pulls back for a few days before returning to gains during a pullback. The stock traded relatively flat on Wednesday, and I think it could still go either way. With that being said, it's a stock to watch on Thursday, because if it can gain a little momentum the stock could very easily trade higher and exceed its 52-week highs set on Monday.

The final stock to watch is one that doesn't really fit into this group of companies, but is worth watching nonetheless: XPO Logistics (NYSEMKT:XPO). XPO Logistics is a company I've supported, and believe in, since Bradley Jacobs invested $150 million into the company and vowed to make XPO his fifth billion dollar creation. In 2012, the company has acquired two companies that will add more than $120 million in annual revenue to XPO. However, the company has lost value in excess of 30% since announcing an offering of $100 million in convertible senior notes on September 19; cash that it really didn't need.

Part of Jacobs' strategy is to raise money. If you count his $150 million initial investment, Jacobs has now raised $350 million, giving the company roughly $300 million on its balance sheet. Overall, this is one of the more promising companies in the market, and its fall was harsh considering the track record of Jacobs. Jacobs has already stated that he's looking at several big acquisitions, which could instantly change the business and valuation of XPO. But for investors such as myself, this loss and period of financing has been hard to swallow. In the meantime, XPO may have found support near $11.90. The volume has finally started to reside, and once the market believes its fall is complete, look for heavy buying pressure. And with only a few months left in the year, investors are going to expect at least another $125 million in revenue via acquisitions ($250 million revenue run rate guidance for acquisitions). Therefore, immediate upside is present, and with the stock perhaps finding a bottom, it could reverse quickly, making it worth the watch.

Disclosure: I am long XPO, AAPL, S, F. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.