Tesla Motors (TSLA), Groupon (GRPN), and Green Mountain Coffee Roasters (GMCR) are in totally different business, but they have two things in common: They are all heavily shorted, and they all reported better than expected results on Wednesday afternoon. This means that they are all prime candidates for a short-squeeze that can send their shares sharply higher - in fact, their shares traded higher on Thursday. But should investors buy them?
Company | Short % of Float | Forward PE | Qtrly Revenue Growth (yoy) | Qtrly Earnings Growth (yoy) | Operating Margin | Operating Cash Flow |
Tesla Motors | 49.20 | 41.63 | 678% | -- | -95.41M | -266.08M |
Groupon | 20.30 | 18.63 | 29.70 | -- | 4.27 | 266M |
Green Mountain Coffee Roasters | 38.70 | 25.69 | 15.60 | 3 | 14.90 | 682.83 |
It all depends on the profile of each investor. Aggressive investors may want to trade all three on the long side, especially Tesla, which has the largest short interest among the three. However, long-term investors must take a close look at the fundamentals of each company. Tesla Motors, for instance, may beat traditional automakers in revenue growth, as it begins from smaller numbers, but it lags far behind in terms of other metrics like operating cash flow and operating margins. That's why long-term investors should be careful before they buy the stock. Likewise, Groupon lags behind other web-based companies like Facebook (FB) and Netflix (NFLX) in almost all the metrics presented in the tables below. As for Green Mountain Coffee, it lags behind its new partner Starbucks (SBUX).
Company | Qtrly Revenue Growth (yoy) | Qtrly Earnings Growth (yoy) | Operating Margin | Operating Cash Flow |
Toyota Motor Corp (TTM) | 9.30% | 23.40% | 1.0 | $31B |
General Motors (GM) | -2.30 | -10.60 | 1.45 | -- |
Ford (F) | 10.30 | 15.40 | 4.83 | 7.18B |
Source: Yahoo.finance.com
Company | Qtrly Revenue Growth (yoy) | Qtrly Earnings Growth (yoy) | Operating Margin | Operating Cash Flow |
37.80% | 6.60% | 9.66% | -1.89B | |
Netflix | 17.70 | -- | 2.23 | -8.51 |
Source: Yahoo.finance.com
Company | Qtrly Revenue Growth (yoy) | Qtrly Earnings Growth (yoy) | Operating Margin | Operating Cash Flow |
Starbucks | 11.30 | 28.60 | 2.23 | 2.55B |
Source: Yahoo.finance.com
The bottom line: Tesla, Groupon, and Green Mountain stocks are for traders and aggressive investors. Conservative investors can find better values elsewhere.
Disclosure: I am long TSLA, F, FB. 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. Short NFLX
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