Which Stocks Look Ready to Pop and Drop with Earnings Next Week?

Indie Research

Stocks tend to be most volatile around earnings season, when a good or bad report can make or break it. However, a good or even great earnings report doesn't necessarily translate into a huge pop for a stock.

During earnings season, BullMarket.com publishes a comprehensive 20- to 30-page Earnings Preview report for the week ahead each Friday.

Over the past two years, BullMarket.com used the data it has collected to correctly predict investor reactions for nearly two-third of the stocks it's previewed.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Apple (Nasdaq: AAPL - News), Netflix (Nasdaq: NFLX - News), Caterpillar (NYSE: CAT - News), Akamai (Nasdaq: AKAM - News), Starbucks (Nasdaq: SBUX - News), Amazon.com (Nasdaq: AMZN - News), Potash Corp. (NYSE: POT - News), Cerner (Nasdaq: CERN - News), Buffalo Wild Wings (Nasdaq: BWLD - News), and Baidu (Nasdaq: BIDU - News).

Here is just a tiny sample of what BullMarket.com wrote about Cerner:

Cerner is a global supplier of healthcare solutions with more than 8,000 clients worldwide. The firm provides information technology, devices, and content solutions including Cerner Millennium architecture, which provides access to an individual's electronic medical record at the point of care and delivers information for physicians, nurses, lab technicians, pharmacists, and consumers. ...

Last quarter, the company earned $91.2 million, or 52 cents per share, in Q4, up from $70.6 million, or 41 cents per share, in Q4 2010. On an adjusted basis, EPS was 55 cents, two cents better than the analyst consensus.

Cerner reported $615.6 million in revenue, which was an increase of 23% from $500.2 million a year ago and well ahead of the $587.3 million analysts had projected.

System sales grew by 34% from Q4 of 2010, driven by strong growth in licensed software, subscriptions, and device resale, slightly offset by flat levels of traditional hardware and sublicense software management said.

Services revenue was up 24% compared to Q4 of 2010 and 20% for the full year, with growth in both managed and professional services. Support and maintenance revenue increased 7% over Q4 of 2010 and 6% for the full year.

Management noted that it signed three large contracts during the quarter, two for its ITWorks product and the other for RevWorks, and said that 35% of its bookings came from clients outside of its core Millennium product base.

"These contracts were clearly not our only large contracts as we had an all-time high level of 32 contracts over $5 million, including a record 19 over $10 million," EVP Zane Burke told analysts. ...

Cerner has surpassed the analyst EPS consensus each quarter over the past two years. During that span, the stock has risen five of eight quarters. Seasonally, the stock has risen three of the last four years. ...

Outside of earnings, Cerner's depth and breadth of product offerings are clearly resonating with clients and it has the strength to evolve its product line to meet increasingly stringent regulatory requirements. Its sales growth in Q4 was strong across product lines, client types, and geographies, which is a nice trifecta, and its book growth was very impressive. It's also important to remember that the company has a very strong recurring revenue base.

We remain big fans of Cerner for its ability to deliver consistent growth and we still like its long-term prospects, which is the best among the healthcare IT group. ...

The full BullMarket.com earnings analysis includes a look at historical earnings data and EPS trends for the companies above and more; examines past investor reactions to earnings in various contexts; gives options activity analysis; reviews previous-quarter earnings; and gives an opinion on both what earnings will look like and how investors will react based on the aforementioned data points.

Just a few of the correct calls BullMarket.com has made for Q1 so far were:

  • to be bullish on eBay (Nasdaq: EBAY - News) ahead of earnings.
  • to be bearish on Cree (Nasdaq: CREE - News) ahead of earnings.
  • to be bearish on IBM (NYSE: IBM - News) ahead of earnings.
  • to be bullish on F5 Networks (Nasdaq: FFIV - News) ahead of earnings.
  • A daily investment service that is committed to creating long-term wealth for its members, BullMarket.com's Recommended List of stocks is up 33.3% from 2008-2011 versus a -14.4% return for the S&P, a 47.7% outperformance, topping the benchmark each year since the start of the Great Recession. Subscribers receive actionable market commentary, access to 40+ stock ideas on the Recommended List, and real-time trade alerts. Plus, sign up for a free trial today to view Bull Market's in-depth Special Reports - including its annual High Yield and MLP reports - and its timely Earnings Previews, which are published every Friday during the heart of earnings season. Get a Risk-Free Trial to Bull Market Today! (Please note returns are unaudited.)

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