Among the stocks I mentioned on-air this week:
This heavily shorted handbag and accessories maker, whose shares have already tumbled on disappointing guidance, continues to be a magnet for the bears.
Among the bearish points (and this mere highlighting):
Concerns that inventory, an issue in the past, will rear its head again.
Vera Bradley, in recent quarters, has taken one charge and, more recently, a hit to the gross margin from inventory-related issues as it sold off a chunk of bloated inventory to T.J. Maxx .
The possibility of channel stuff, based on favorable terms to some customers.
A growing conflict between the growing number of company stores, its online store and its so-called “indirect” channel of mom-and-pop stores, which account for around half of sales.
CFO Jeff Blade disputes there are issues. He says the company uses off-priced retailers “on a selective basis” and will use them less once its own outlet network is built.
He says favorable terms were offered to 1,800 of its 3,400 retailers to make sure they had enough inventory in stock. And he believes that Vera, which went public in 2010, likes to “think of ourselves as an early stage growth company.”
My take: I’m opening a file.
This maker of voice-recognition software is an old name for me.
The issue for Nuance all along: Its growth, for years, has been via acquisitions. Organic growth is meek relative to valuation. And Microsoft and Google represent steep competition.
Analysts seem to be upgrading it left and right.
But Wedbush’s Scott Sutherland is sticking by his “underperform.”
And Wedge Partners Brian Blair, who was positively predisposed to the company prior to visiting the Consumer Electronics Show, left the event negatively inclined. He was surprised to see no Nuance in the new voice-recognition TVs from Samsung and Sony .
My take: Voice-recognition is rapidly becoming a commodity. It will be interesting to see how that shakes out in the numbers. Nuance is no longer a monopoly—gutsy of Sutherland and Blair to go against the herd.
As we head into earnings season, one hot stock that hasn't cracked is Rackspace .
This is the data hosting company that has morphed into a cloud play.
But the company continues to be a magnet for short-sellers, who question, among other things:
The rapid rise in capital spending; this was something analyst asked about on the last conference call.
Declining revenue per customer, which might suggest pricing pressures or a move downstream to smaller, riskier customers. (The company prefers to cite revenue per server, which is rising.)
A move into managing data centers, which suggests to some that the core hosting business, cloud or otherwise, has its limits.
I've raised some of these issues in the past, including the idea that, in the end, hosting is a commodity.
But this is one of those stocks Wall Street really likes. The company's message all along has been the same: This will all pay off in the end.
My take: Priced for perfection.
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