When considering stocks, it's always helpful to gauge what the rest of the market thinks. One source for that is the number of shares shorted. Companies seeing significant increases in shares shorted are being viewed more negatively, and vice-versa.
To create the list below we screened the technology sector for stocks that are seeing the most significant decreases in shares shorted month-over-month. This indicates that growing number of short sellers are no longer bearish on these names.
Then we screened for stocks that paid a dividend of at least 1% but not more than 5%. This allowed us to stay away from the high yield space.
Our final list consisted of 3 stocks that met the criteria.
A Closer Look
We looked at Lexmark International (LXK) in more detail. The stock trades around $23.21 versus its 52-week high of $38.34, down 40% in the past 1-year. The stock trades with a P/E multiple of 6 times, and pays a 5% dividend. The company's competitors Canon (CAJ), and Hewlett Packard (HPQ) pay a dividend of 4.3%, and 3.2%, respectively.
On January 29th, 2013, Lexmark International reported fourth quarter earnings per share of $0.61 versus consensus of $0.90. The primary reason for the miss in earnings was an increase in costs, which impacted the company's bottom-line results. More importantly, the company expects to realize $85 million in savings in 2013. Do you think this will trigger a turnaround for the stock?
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.
Do you think these stocks will outperform too? Use this list as a starting point for your own analysis.
1. Lexmark International Inc. (LXK): Develops, manufactures, and supplies printing and imaging solutions for offices.
- Market cap at $1.51B, most recent closing price at $23.21.
- Shares shorted have decreased from 15.63M to 14.35M over the last month, a decrease which represents about 2.03% of the company's float of 63.16M shares. Days to cover ratio at 10.01 days.
- Dividend yield at 5%.
2. Seagate Technology PLC (STX): Designs, manufactures, markets, and sells hard disk drives for the enterprise, client compute, and client non-compute market applications in the United States and internationally.
- Market cap at $12.54B, most recent closing price at $34.44.
- Shares shorted have decreased from 44.88M to 41.74M over the last month, a decrease which represents about 1.01% of the company's float of 309.68M shares. Days to cover ratio at 4.79 days.
- Dividend yield at 4.4%.
3. Western Digital Corp. (WDC): Engages in the design, development, manufacture, and sale of hard drives worldwide.
- Market cap at $11.75B, most recent closing price at $48.59.
- Shares shorted have decreased from 12.41M to 10.06M over the last month, a decrease which represents about 1.1% of the company's float of 214.18M shares. Days to cover ratio at 2.49 days.
- Dividend yield at 2%.
*Short data sourced from Yahoo! Finance, all other data sourced from Finviz.