Five Stocks to Watch in August

The U.S. stock market ended July on a bearish note, with the Dow Jones Industrial Average wiping out all of its 2014 gains on Thursday. The Dow Jones average fell -317.06 points or -1.88 percent, closing at 16,563.30, just under its level at the beginning of the year. The tech-heavy NASDAQ composite index dropped -93.13 points or -2.09 percent to close at 4,369.77 but still remained in the black for the year, up +4.63 percent, while the broad based S&P 500 Index dropped -39.40 points, or -2 percent to end the month at 1,930.67, still +4.45 percent higher for the year.

August promises to be an interesting month for stocks, with a number of large mergers and initial public offerings, in addition to improving U.S. economic numbers that could pressure the Federal Reserve to begin raising interest rates.

T-Mobile US Inc. (TMUS) – As T-Mobile's takeover by Sprint (S) continues facing obstacles, French company, Iliad has just made a $15 billion cash bid for 56.6 percent of T-Mobile US. The French company's bid for the U.S.'s fourth largest carrier may not pan out given T-Mobile's existing bid of roughly $32 billion from Sprint, nevertheless, the new bid will generate volatility in T-Mobile stock and could make Sprint sweeten their bid.

Chipotle Mexican Grill Inc. (CMG) – After reporting stellar earnings earlier this week, Chipotle Mexican Grill stock soared to make a new all time high of $680.37 per share on Wednesday. With a +26 percent increase in revenue and a +24 percent rise in earnings year on year, the restaurant chain continues to outperform both the market and analyst estimates. Chipotle stock is already up +26.2 percent year to date and +62.5 percent higher than its price at this time last year.

Twitter Inc. (TWTR) – Twitter announced earlier this week that its number of active users had jumped +24 percent to 271 million in the second quarter. After the news, Twitter stock soared to $46.30 per share, valuing the company at $27.3 billion, five times the valuation of Facebook (FB) with 1.3 billion active users. Facebook is trading at 39.4 times forward earnings while Twitter is trading at 200 times, giving analysts pause for Twitter's comparatively higher valuation. August will certainly be an interesting month for Twitter stock.

LinkedIn Corp. (LNKD) – LinkedIn stock is up almost seven percent in premarket trading this morning, after reporting second quarter earnings that beat analyst expectations. The company reported earnings of $0.51 per share, versus $0.38 one year ago; analysts expected earnings of $0.39 per share. The stock traded as high as $257.56 per share earlier this year and is currently trading at $192.88, up +12.24 from yesterday's close.

Family Dollar Stores (FDO) – This week's $8.5 billion bid for Family Dollar Stores by Dollar Tree (DLTR) could spark a mergers and acquisition price war according to some analysts. While the companies have enough cost savings to cover the 23 percent premium to Carl Icahn — who announced a 9.4 stake in Family Dollar last month — and other investors, the low synergies could allow for a competing bid from sector leader Dollar General (DG).

Published on Aug 1, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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