Short Interest In Best Buy Rises Again (AVP, BBY, GME)
In the lead up to Black Friday and the rest of the holiday shopping season, Avon Products (NYSE: AVP), Best Buy (NYSE: BBY) and GameStop (NYSE: GME) saw the largest swings in short interest among the struggling U.S. retailers.
Others that saw the number of their shares sold short swell somewhat between the November 15 and November 29 settlement dates include Barnes & Noble, Office Depot and SUPERVALU.
Short interest in Bebe Stores, RadioShack and Rite Aid was essentially unchanged from the previous period.
In addition, short sellers also shied away from Bon-Ton Stores, J.C. Penney, Pacific Sunwear and Sears Holdings during the period.
See also: Short Interest In Solar Stocks Is Mixed
Below is a quick look at how Avon Products, RadioShack and GameStop have fared and what analysts expect from them.
This beauty and personal care products purveyor saw short interest retreat about 20 percent in late November to almost 10.11 million shares. That was the smallest number of shares sold short since August, and it was more than two percent of the float. The days to cover rose to around three.
In November, Avon still struggled with bribery allegations in China. The company has a market capitalization of more than $7 billion and a dividend yield near 1.3 percent. Though the long-term earnings per share (EPS) growth forecast is more than 14 percent, the return on equity is in the red.
Of the 13 analysts who follow the stock that were surveyed by Thomson/First Call, four rate Avon at Strong Buy, and another three also recommend buying shares. Their mean price target, or where they expect the share price to go, is about 18 percent higher than the current share price.
The share price has pulled back more than five percent in the past week, though it is still up almost 12 percent year to date. The stock has underperformed the likes of Procter & Gamble and Revlon over the past six months, as well as the broader markets.
After dropping in the previous two periods, the short interest in this specialty retailer surged more than a third to more than 21.22 million shares by the end of the November. That represents more than seven percent of the float. Days to cover fell to less than three for the first time since August.
Analysts expect to see strong EPS growth but a decline in sales in Best Buy's upcoming quarterly report. It has a market cap of about $14 billion and a dividend yield near 1.6 percent. The long-term EPS growth forecast is less than seven percent, and here too the return on equity is in the red.
Fourteen of the 23 analysts surveyed recommend buying Best Buy shares. They see plenty of headroom for the stock as their mean price target is about 15 percent higher than the current share price. Shares have not traded at that level since April of 2010.
Shares have retreated more than eight percent in the past month from near a 52-week high. However, the share price is still about 46 percent higher than six months ago. In that time, the stock has outperformed competitors Amazon.com and Walmart, as well as the broader markets.
Short interest in this Grapevine, Texas-based specialty retailer grew more than nine percent late in the month to more than 20.14 million shares. That represented more than 17 percent of the float. Days to cover fell from nine to about four, the lowest it has been this year.
GameStop posted strong third-quarter results, due in part to the popularity of Grand Theft Auto V. The video game retailer has a market cap of more than $5 billion and a dividend yield near 2.2 percent. The long-term EPS growth forecast is more than 15 percent, and the return on equity is almost 18 percent.
The consensus recommendation of the analysts surveyed is to buy GameStop shares, and it has been for at least three months. Their mean price target suggests that the analysts see more than 23 percent potential upside in the next year. That target would be a new multiyear high.
The share price has pulled back more than 20 percent in the past month from a multiyear high. But it is still up more than 77 percent year to date. Over the past six months, the stock has underperformed the likes of Amazon.com and Best Buy, but it has outperformed the broader markets.
At the time of this writing, the author had no position in the mentioned equities.
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