J.C. Penney (NYSE:
Why It Could Double: Shares have been badly beaten after CEO Ron
Johnson's turnaround attempt floundered, attracting heavy short
However, Johnson's remodeled stores show promise. If Johnson's
"always low price" strategy can catch on with consumers, and the
company can successfully remodel more of its stores, the recent
terrible trend in earnings performance could quickly change
direction, prompting a rally and bringing a short squeeze that
could take the shares to heights not seen in years.
Why It Could Go Bust: Johnson's turnaround attempt has begun to
eat into J.C. Penney's cash. The company might not be anywhere near
bankruptcy at this point, but shares could quickly fall further if
the recent string of poor earnings reports continues.
Johnson has already backed off somewhat on his strategy,
offering some token discounting. If this fails, even the most loyal
of investors might flee the stock. Traders should watch hedge fund
magnate Bill Ackman particularly close -- he's been the most vocal
J.C. Penney bull out there and a large shareholder. If Ackman
bails, the end could be near.
Research in Motion (NASDAQ:
Why It Could Double: RIM has already posted great performance in
the last quarter of 2012, largely on speculation that the company's
new operating system -- Blackberry 10 -- could lead to a resurgence
at the Canadian handset maker.
If Blackberry 10 lives up to expectations, RIM's devices could
become the go-to smartphones for business users once again, beating
back strides that Apple's iPhone has made in recent years.
There's also the outside chance that another tech company could
swoop in to purchase RIM. Samsung, Facebook (NASDAQ:
), and Amazon (NASDAQ:
) might be potential acquirers.
Why It Could Go Bust: RIM's recent rally has been more of a
short squeeze than anything else. Hope for Blackberry 10 remain
just that -- hope.
If Blackberry 10 fails to live up to expectations, RIM's days
are likely numbered. Apple (NASDAQ:
) and Google (NASDAQ:
) powered smart phones will continue to push it out of the market,
to say nothing of Microsoft's (NASDAQ:
) Windows Phone 8.
Why It Could Double: Shares were trading as high as $70 in the
first half of 2012, before short selling speculation pushed shares
into the high $40 range. When Bill Ackman finally announced his
short thesis, shares fell below $30.
Ackman's short thesis is largely based around the FTC pushing
the company out of business on charges of being a pyramid scheme.
If Ackman fails in this endeavor, it seems intuitive that shares
would trade back to their prior levels.
Why It Could Go Bust: Ackman's price target on the stock is $0.
He isn't just saying the company has a lousy business model, but
rather, that the company is operating an illegal pyramid
If Ackman's allegations are true, and the FTC decides to act on
them, shares might soon be worthless.
Alpha Natural Resources (NYSE:
Why It Could Double: Shares of this coal stock traded down over
50 percent in 2012. Demand for the company's thermal coal has
declined significantly, as utilities have turned to natural gas as
a cleaner alternative.
Shares could come roaring back
if demand for thermal coal rebounds. Rebounding natural gas prices
coupled with a resurgent Chinese economy could provide the demand
that Alpha Natural needs.
Why It Could Go Bust: Coal demand has been declining for years.
Natural gas prices might not head lower, but they could stay around
current levels, leaving them attractive to utilities. As for China
-- the Shanghai composite has rebounded in recent weeks, but many
market commentators still see the potential for a hard landing.
Why It Could Double: Shares have already nearly doubled in the
last few weeks. A move back to $10 would still have shares down 50
percent from the company's IPO price of $20 per share.
Tiger Global took a nearly 10 percent stake in the company near
its lows. The fund has already profited on the stake, but it could
see further upside in the company. There's also the issue of
management: The company's CEO, Andrew Mason, has been widely viewed
as a failure. If Groupon opts to replace him, it could lead to pop
Why It Could Go Bust: Groupon has had its critics since before
it went public. Questionable accounting practices and an unstable
business model have been the bears' primary allegations, which have
seemingly been proven correct in the wake of Groupon's share price
Groupon's top competitor, LivingSocial, doesn't appear to have
fared much better. Amazon (NASDAQ:
) -- a significant backer -- recently wrote off much of the value
of its investment in the daily deals company.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice.
All rights reserved.
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