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August Stock Leaders: Crocs, Inc.,, inc., and GT Advanced Technologies Inc

CROX, CRM, and GTAT have historically outperformed in the month of August

by 8/5/2014 2:02:15 PM
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Schaeffer's Quantitative Analyst Chris Prybal ran a study to determine which stocks tend to perform best during the month of August, limiting the search to those equities with five returns or more on record. Among the names that average at least a 5% gain during the month ahead are footwear firm Crocs, Inc. (NASDAQ:CROX), cloud computing specialist, inc. (NYSE:CRM), and solar equipment concern GT Advanced Technologies Inc (NASDAQ:GTAT).

With eight August returns under its belt, CROX sports an average monthly return of 9.2% -- even though it's ended the month higher only 25% of the time. In other words, when CROX turns in an August rally, it's typically a big one. The stock has pulled back a bit on the charts since a post-earnings gap higher on July 22, but it's now testing support in the $15.50-$16 neighborhood. This region formerly acted as resistance, and could be switching roles to serve as a floor for the shares.

During the short term, CROX could benefit from a reversal of sentiment among bearish bettors. Short interest accounts for 6.1% of the stock's float, or 7.8 times CROX's average daily trading volume. Meanwhile, 57% of analysts maintain a tepid "hold" rating on Crocs, Inc. (NASDAQ:CROX), leaving plenty of room for future upgrades. At last check, CROX is up 1.4% at $16.15.

Over the last 10 summers, CRM has notched an average August return of 5.7%, and has ended the month higher six times. The company's fiscal second-quarter earnings report -- due out after the close on Thursday, Aug. 21 -- could determine whether CRM notches another August win. The shares are hovering around breakeven on a year-to-date basis, but support from their rising 320-day moving average is just a few points away from CRM's current perch at $54.73.

On the sentiment front, Wall Street is overwhelmingly upbeat toward, inc. (NYSE:CRM). The stock has racked up 24 "buy" or better ratings, compared to two "holds" and zero "sells." However, with a respectable 7.2% of CRM's float sold short, there are still some potential buyers on the sidelines who could help to support future upside.

GTAT has rallied 70.4% year-to-date to trade at $14.86, and -- if the stock's track record is any indication -- more gains could be in store over the next several weeks. With six August returns on the books, GTAT has ended the month higher 67% of the time, sporting an average gain of 5.3% for the period. To put that number in perspective, GTAT was up 9.3% at its intraday high of $15.44 earlier, with traders cheering an upwardly revised full-year profit forecast.

Today's post-earnings rally could be the start of a short-squeeze scenario, as no less than 34.4% of the equity's float is sold short. Plus, GT Advanced Technologies Inc (NASDAQ:GTAT) could also benefit from a capitulation by bearish options traders. During the 10 days leading up to its quarterly results, GTAT garnered a put/call volume ratio of 0.77 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio registers in the 96th annual percentile, suggesting a stronger-than-usual bearish bias among speculative players.


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