3 Technology Stocks with Bullish Short Trends

When considering stocks, it's always helpful to gauge what the rest of the market thinks. One source of sentiment is the number of shares shorted. Companies seeing significant increases in shares shorted are being viewed more negatively, and vice-versa.

We ran a screen on the technology sector for stocks seeing the most significant decreases in shares shorted month-over-month. This indicates that short sellers are becoming less bearish on these stocks.

Why the optimism? To find at least one possible fundamental signal for the bullish sentiment we looked through financials of the 15 companies in our universe for those with strong sales trends, comparing growth in revenue to growth in accounts receivable. Since accounts receivable is the portion of revenue not yet received, and there is no guarantee the money will ever be received, the smaller the portion of revenue made up of receivables, the healthier the company's revenue.

We screened for stocks seeing faster growth in revenue than accounts receivable year-over-year, as well as accounts receivable comprising a smaller portion of current assets over the same time period.

Do you think short sellers are betting on improving top-line growth?

The List

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

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Use this list as a starting point for your own analysis.

1. Activision Blizzard, Inc. (ATVI): Publishes online, personal computer (PC), console, handheld, and mobile games of interactive entertainment worldwide.

Market cap at $15.73B, most recent closing price at $14.26.

Shares shorted have decreased from 15.45M to 8.15M over the last month, a decrease which represents about 1.74% of the company's float of 418.49M shares. Days to cover ratio at 0.94 days.

Revenue grew by 25.75% during the most recent quarter ($1,768M vs. $1,406M y/y). Accounts receivable grew by 8.94% during the same time period ($707M vs. $649M y/y). Receivables, as a percentage of current assets, decreased from 12.06% to 11.27% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).

2. Cavium, Inc. (CAVM): Designs, develops, and markets semiconductor processors for intelligent and secure networks.

Market cap at $1.51B, most recent closing price at $29.60. 

Shares shorted have decreased from 5.62M to 5.02M over the last month, a decrease which represents about 1.21% of the company's float of 49.58M shares. Days to cover ratio at 5.47 days.

Revenue grew by 17.91% during the most recent quarter ($66.37M vs. $56.29M y/y). Accounts receivable grew by -11.28% during the same time period ($33.57M vs. $37.84M y/y). Receivables, as a percentage of current assets, decreased from 24.97% to 20.36% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).

3. Computer Sciences Corporation (CSC): Provides information technology (IT) and professional services to governments and commercial enterprises.

Market cap at $6.82B, most recent closing price at $44.23. 

Shares shorted have decreased from 3.00M to 1.50M over the last month, a decrease which represents about 1.03% of the company's float of 145.04M shares. Days to cover ratio at 0.96 days.

Revenue grew by 2.55% during the most recent quarter ($3,781M vs. $3,687M y/y). Accounts receivable grew by -10.83% during the same time period ($2,939M vs. $3,296M y/y). Receivables, as a percentage of current assets, decreased from 70.56% to 52.31% during the most recent quarter (comparing 3 months ending 2012-12-28 to 3 months ending 2011-12-30).

 

Short data sourced from Yahoo Finance, all other data sourced from Finviz.

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