3 Stocks Set to Sink in April

Activision Blizzard, Inc. (ATVI), QUALCOMM, Inc. (QCOM), and United Continental Holdings Inc (UAL) could struggle next month

by Alex Eppstein

Published on Mar 31, 2016 at 12:22 PM
Updated on Jun 24, 2020 at 10:16 AM

Yesterday, we surveyed three stocks that could soar in April, based on historical returns. Today, we want to check out the other side of the ledger. Toward that end, Schaeffer's Quantitative Analyst Chris Prybal looked back to 1972 and found the 20 stocks with the worst average April returns. The full list is below, but we'll be drilling down on three names in particular: video game guru Activision Blizzard, Inc. (NASDAQ:ATVI), telecom titan QUALCOMM, Inc. (NASDAQ:QCOM), and transportation giant United Continental Holdings Inc (NYSE:UAL).

160331worstaprilstocks

ATVI has been publicly traded for the past 32 Aprils, and has been positive less than half of those times. Typically, the stock loses 3% during the month. While the shares are 0.6% higher today at $34.26, they've lost 11.5% in 2016 -- thanks in part to a downbeat earnings report in February -- and face a potential layer of resistance at their overhead 100-day moving average.

That hasn't stopped option traders from betting bullishly on Activision Blizzard, Inc. The stock's 10-day call/put volume ratio of 5.99 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) outranks two-thirds of all readings from the past year. A capitulation among these bullish bettors could exacerbate selling pressure.

Meanwhile, QCOM has been positive just eight times in the past 24 Aprils, losing 3.2%, on average. Should history repeat itself, it would simply add to the stock's longer-term technical struggles. On a year-over-year basis, the shares have surrendered 26.2% to trade at $51.26.

Nonetheless, 11 analysts still rate QUALCOMM, Inc. a "strong buy," paving the way toward potential downgrades. In addition, short interest has been on the rise, spiking 34.6% during the last two reporting periods. However, just 1.5% of QCOM's stock is sold short, suggesting there's plenty of room for additional short selling to weigh on the shares.

Finally, UAL averages a loss of 5% during the month of April, and has been positive just four times in the past decade. To make matters worse, the stock -- currently up 1.7% at $60.82 -- has been struggling to clear the $60-$62 zone, which has served as resistance since last September.

If past is precedent, United Continental Holdings Inc will retreat next month. This could spark a round of downgrades from analysts, 80% of whom rate the stock a "strong buy" -- with not a single "sell" opinion to be found.

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