U.S. equities moved lower on Thursday — the first decline in five sessions — as optimism around trade talks with Canada are eclipsed by a worsening situation in emerging market currencies. Argentina raised its policy rate by 15% to 60% to try to bolster its falling currency. There are bloodbaths underway in Brazil’s and Turkey’s currencies as well.
While the losses are modest so far, the risk of a more significant downside move would justify the intense interest by hedge fund types in risk protection in the options market. That’s bolstered a measure known as the SKEW which tracks how much people are willing to pay to protect against “Black Swan” events. This is offsetting what are admittedly very bullish signs in play, such as technical breakout of the S&P 500 from its post-January trading range this week.
Wherever things go from here, these four small-cap stocks are already feeling the pain:
Small-Cap Stocks to Sell: Gamestop (GME)
GameStop (NYSE:GME) shares are under pressure, falling nearly 20% from their recent high because recent reports have indicated that hopes for a buyout deal are dwindling. This was bad timing for the analysts over at Jefferies, who initiated coverage on the company with a Buy rating and an $18 price target back in July.
The company will next report results on Sept. 6, after the markets close. Analysts are looking for earnings of 8-cents-per-share on revenues of $1.6 billion. When the company last reported on May 31, earnings of 38-cents-per-share beat estimates by a penny despite a 5.5% decline in revenues.
Small-Cap Stocks to Sell: Michaels Companies (MIK)
Michaels Companies (NASDAQ:MIK) shares dropped hard, yesterday, but are making a slight rebound in early morning trading. The dip came after MIK reported weak forward guidance. The company reported earnings of 15-cents-per-share, which was 2 cents ahead of estimates despite a 1.8% decline in revenues. But investors balked at weaker-than-expected earnings-per-share guidance of between 42- and 45-cents-per-share. The Street was looking for 52 cents.
When the company last reported on Aug. 30, earnings of 15-cents-per share beat estimates by 2 cents on a 1.8% decline in revenues.
Small-Cap Stocks to Sell: Lending Club (LC)
Lending Club (NYSE:LC) shares are falling away from their 200-day moving average; down roughly 20% from their July high, LC shares are testing the bottom of a three-month consolidation range. Watch for a move back down to the May low, which would be worth an additional decline of nearly 30% from here.
The company will next report results on Nov. 6, after the close. Analysts are looking for earnings of 3-cents-per-share on revenues of $181.4 million. When the company last reported on Aug. 7, earnings of 3-cents-per-share beat estimates by a penny on a 26.8% rise in revenues.
Small-Cap Stocks to Sell: Groupon (GRPN)
Groupon (NASDAQ:GRPN) shares are threatening to fall down and out of a seven-month consolidation range with critical support near $4.10. A breakdown here would threaten a return to the lows seen in the summer of 2017 — a decline of nearly a third from here. Investors are losing heart after management indicated that while possible buyout deals have come and gone, nothing firm seems to be on the horizon.
The company will next report results on Nov. 2, before the bell. Analysts are looking for earnings of 1-cent-per-share on revenues of $601.8 million. When the company last reported on Aug. 3, earnings of 2-cents-per-share missed estimates by a penny on a 6.8% decline in revenues.