Why October Looks Ominous for These 3 Stocks

Advanced Micro Devices, Inc. (NASDAQ:AMD), Canadian Solar Inc. (NASDAQ:CSIQ), and MannKind Corporation (NASDAQ:MNKD) are among the worst-performing stocks in October

by Alex Eppstein

Published on Sep 30, 2015 at 2:19 PM
Updated on Jun 24, 2020 at 10:16 AM

Yesterday, we took a look at three stocks with the potential to rally next month, based on historical trends. Today, I've decided to turn the tables by focusing on equities that traditionally struggle in October. To that end, Schaeffer's Senior Quantitative Analyst Rocky White put together the list below, which shows the 25 worst-performing October stocks over the past 10 years. Following the chart, you'll find commentary on a trio of underperformers: Advanced Micro Devices, Inc. (NASDAQ:AMD), Canadian Solar Inc. (NASDAQ:CSIQ), and MannKind Corporation (NASDAQ:MNKD).

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Advanced Micro Devices, Inc. (NASDAQ:AMD)

Chipmaker AMD has a woeful October track record, sporting gains in just two of the past 10 years, with an average loss of 12.7%. Last year, the shares slid an even steeper 17.9%. The stock is no stranger to sharp declines; year-over-year, AMD has surrendered almost half its value.

Things could get even worse in a couple weeks, with the company slated to report earnings mid-month. Over the past eight quarters, AMD has averaged a single-day, post-earnings swing of 10.1%, five of which have been to the downside.

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These technical troubles haven't prevented option traders from betting bullishly on AMD. During the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open almost 10 calls for every put. The corresponding call/put volume ratio of 9.71 registers above two-thirds of comparable readings, looking back one year. A capitulation among these bullish holdouts could spell headwinds for AMD.

Canadian Solar Inc. (NASDAQ:CSIQ)

CSIQ has lost over 32% of its value in 2015, last seen at $16.40. If past is precedent, next month could unlock even steeper declines. In just two of the past eight Octobers, the shares have advanced; plus, their typical one-month decline registers at 6.5%.

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A repeat performance could finally prompt an upbeat brokerage bunch to throw in the towel. All seven analysts tracking CSIQ have handed out "strong buy" assessments, and its consensus 12-month price target of $37.34 represents a 128% premium to current levels. Should a round of downgrades and/or price-target cuts come down the pike, CSIQ could post another dreadful October performance.

MannKind Corporation (NASDAQ:MNKD)

MNKD has given up ground eight times in the past decade, looking strictly at the month of October. On average, the stock has lost 13.6% -- worse than all but one equity on the summary chart above. That's bad news for shareholders, who have already watched MNKD surrender 39% year-to-date to trade at $3.16, and earlier this week hit a two-year low of $3.

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Short sellers have been bearing down on MNKD amid this negative technical trend. An astounding 47.3% of the equity's float is sold short -- or 33.9 times the average daily trading volume. Should the shares sustain their downward momentum, additional short sellers could jump on the bearish bandwagon, exacerbating losses.

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