Downgraded earnings expectations and increasing debt loads is a dangerous double whammy that makes these four stocks noteworthy candidates for short plays.
Today’s list includes four companies that have lowered earnings guidance below analysts’ estimates within the past month. Additionally, these companies have recently seen accounts receivable growth exceeding revenue growth, an accounting trend that raises a big red flag.
Does this mean the customers of the companies mentioned below cannot pay their bills? Or is this simply an indication of a structural business change?
Be advised that there may be several viable explanations for these accounting trends, so please use this list only as a starting point for your own analysis, and be sure to conduct your own research before executing trades on these or any stocks.
Anadigics, Inc. (ANAD): Semiconductor industry. Market cap of $359.41 million. Guided Q1 at a loss between -$0.07 to -$0.08 versus estimates of a gain of $0.04. Most recent quarterly revenue grew by 44.06% on a year-over-year basis, while accounts receivable grew by 76.41%. Accounts receivable, as a percentage of current assets, increased from 16.14% to 22.56% (comparing three months ending Dec. 30, 2009 versus three months ending Dec. 30, 2010). Short float is at 5.25%, which implies a short ratio of 2.57 days. The stock has gained 27.17% over the last year.
Recent developments: Announced joining the Global Select Market of the Nasdaq Stock Market (Jan. 2011)
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TriQuint Semiconductor, Inc. (TQNT): Semiconductor industry. Market cap of $2.27 billion. Guided Q1 at $0.14 - $0.16 versus estimates of $0.19. Most recent quarterly revenue grew by 31.06% on a year-over-year basis, while accounts receivable grew by 57.78%. Accounts receivable, as a percentage of current assets, increased from 24.56% to 25.11% (comparing three months ending Dec. 30, 2009 versus three months ending Dec. 30, 2010). Short float is at 7.83%, which implies a short ratio of 2.78 days. The stock has gained 98.47% over the last year.
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Parexel International Corp. (PRXL): Medical laboratories and research industry. Market cap of $1.38 billion. Guided full-year 2011 at $1.17 - $1.23 (down from $1.23 - $1.31) versus estimates of $1.26. Most recent quarterly revenue grew by 7.71% on a year-over-year basis, while accounts receivable grew by 21.78%. Accounts receivable, as a percentage of current assets, increased from 73.58% to 78.47% (comparing three months ending Dec. 30, 2009 versus three months ending Dec. 30, 2010). Short float is at 9.02%, which implies a short ratio of 5.62 days. The stock has gained 14.26% over the last year.
Recent developments: Announced opening of logistics facilities in Singapore and Russia (Dec. 2010)
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Intersil Corporation (ISIL):Semiconductor industry. Market cap of $1.59 billion. Guided Q1 at $0.13-$0.16 versus estimates of $0.17. Most recent quarterly revenue grew by 9.17% on a year-over-year basis, while accounts receivable grew by 20.47%. Accounts receivable, as a percentage of current assets, increased from 13.32% to 14.54% (comparing 13 weeks ending Jan. 1, 2010 versus 13 weeks ending Dec. 31, 2010). Short float is at 10.54%, which implies a short ratio of 4.64 days. The stock has lost 14.22% over the last year.
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By the Staff at Kapitall.com
See also “Four Stocks You Shouldn't Short”
