Which Stocks Look Ready to Pop and Drop with Earnings This 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 year, BullMarket.com used the data it has collected to correctly predict investor reactions for approximately two-third of the stocks it's previewed.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Baidu (BIDU), Amazon.com (AMZN), Netflix (NFLX), Whole Foods (WFM), Caterpillar (CAT), Starbucks (SBUX), Facebook (FB), Deckers Outdoors (DECK), and Apple (AAPL).

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

Whole Foods has topped analyst EPS estimates each quarter over the past two years. During that time, the stock has risen the next session six of eight quarters. Seasonally, the stock has risen two of the last four years.

Last quarter, earned $117.7 million, or 64 cents per share, for the fiscal second quarter that ended April 8th. That was up from $89.9 million, or 51 cents per share, in the same quarter last year.

That beat analyst expectations of earning 59 cents per share for the quarter.

Whole Foods said revenue rose nearly 14% to $2.67 billion, meeting market expectations. The company said it benefited from the Easter holiday shifting from the third quarter last year into the second quarter this year. Its sales on a same- store basis grew by 9.5%.

Founder and co-CEO John Mackay said it was the best quarter in the company's history.

Whole Foods said it expected to earn $2.44 to $2.47 per share for the full year on added stores and continued sales gains. That's up from its prior guidance that called for EPS of $2.28 to $2.32 for the year. It was also ahead of the $2.34 per share consensus estimate that was in place at the time. ...

Outside of earnings, Whole Foods is a very strong company that will continue to benefit from the public's embrace of natural and organic foods. Whole Foods already does very well with the Baby Boom generation because as its members age they have become more health conscious. It also does well with younger buyers that were raised eating natural foods and thus aren't converts. News reports about things such as so-called "pink slime" beef, even if inaccurate or misleading as the beef industry says they are, only serve to drive more consumers into the arms of purveyors like Whole Foods.

The company has a long way to go to reach its goal of 1,000 stores, and we like its strategy of taking advantage of depressed real estate prices to broaden its footprint. Those new stores will only add to margins that are the envy of the grocery industry, especially since Whole Foods' more-affluent customer base willingly absorbs its higher price points. As we've also noted in prior reports, for all the talk of food cost inflation, Americans spend on average just 8% of their household income on food, compared with 15% in the 1970s and nearly 50% a century ago. ...

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 recent correct calls BullMarket.com made for Q2 were:

  • to be bullish on Qualcomm (QCOM) ahead of earnings.
  • to be bullish on eBay (EBAY) ahead of earnings.
  • to be bullish on F5 Networks (FFIV) 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.)

    View Comments