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Three You Must Watch and Another Coming to Market

Stocks in this article: FCEL CIEN HOV

NEW YORK ( TheStreet) - Three companies reporting earnings next week are a must watch, because they can make or break a lot of traders. Two of the stocks are short-squeeze candidates and the third can go either way. HOV Chart HOV data by YCharts

Hovnanian Enterprises Inc (HOV) Hovnanian Enterprises Inc (HOV)

Hovnanian Enterprises (HOV) is one of the nation's largest homebuilders. The company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Brighton Homes, Parkwood Builders, Town & Country Homes, Oster Homes and CraftBuilt Homes.

52 Week Range: $1.52 to $7.43

Book Value: $-4.43

Wall Street expects earnings to come in below last year's quarter. The earnings release is scheduled before the market opens Wednesday.

The current mean estimate is a loss of five cents a share, declining seven cents from a profit of two cents in the corresponding period last year. Analysts' estimates for this quarter range from losing 10 cents to losing only three cents a share.


Analyst opinion is mixed. Most of those surveyed don't believe a buy or a sell is warranted. The stock appreciated 225% in the last year, and the average analyst target price for Hovnanian is $5.25.

Hovnanian could turn a profit in 2013, and the market is pricing in sunnier days, but you want to buy this one only during dips. We don't know how the housing market will react to rising interest rates and at the time of writing, the average 30-year fixed rate is flirting with 4%.

We have to travel back over a year, and almost into 2011 to find a week when average rates were over 4%. Regardless of why rates may continue to climb, we can safely assume that with all else being equal, higher rates are inversely correlated with home prices and demand.

Because of those expected headwinds, which also create price and profit pressure, analysts may be generous with 2014 profit projections near 50 cents a share. Without any hiccups, a safer number to model is 40 to 45 cents for upside potential.

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