Which Stocks Look Ready to Pop or Drop After 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.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Zillow (Nasdaq:Z), Hain Celestial (HAIN), Monster Beverage (MNST), Telsa (TSLA), Michael Kors (KORS), Whole Foods (WFM), SolarCity (SCTY), Qualcomm (QCOM), Groupon (GRPN), and Priceline.com (PCLN).

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

Zillow has topped analyst EPS estimates each quarter since it IPO'd in July 2011. Over the past two years, the stock has risen the next session four of eight quarters. Seasonally, the stock fell once in the past two years. ...

Last quarter, Zillow swung to a second-quarter loss on higher expenses. The real estate information service said it lost -$10.2 million, or 30 cents per share, compared to a year-earlier profit of $1.3 million, or -4 cents per share.

On an adjusted basis excluding one-time items like stock option expense, the company booked a penny per share in profit. Analysts had projected a loss of - 11 cents per share.

Total costs and expenses more than doubled to $57.3 million.

Total revenue jumped 69% to $46.9 million, above its guidance range of $43.5 million to $44.5 million.

Zillow's marketplace unit, which provides advertising services and sales leads to lenders and real estate agents, reported an 86% jump in sales to $36.5 million. Display revenue increased 29% to $10.5 million. ...

Outside of earnings, Zillow is in the early stages of its growth strategy as it has been investing heavily in adding new products to its list of offerings. It can also be expected to increase spending on internal product development, expanding its sales force and beefing up existing services to maintain its first-mover advantage. Given that scenario, we would not expect consistent profits in the near term but there should be strong revenue growth. The pace of its growth will be a major determinant of how positively investors view the name.

A strong housing market is one of the lynchpins of the economy and it is finally on the path to recovery. People still need a place to live and there will always be a resale and rental market. Zillow has built a highly regarded and viable Web property in a fairly short period of time and has a very long growth pathway. It is another "marketplace" website linking potential buyers to sellers, which is a model that works well on the Internet. It is particularly well suited to mobile devices.

Its expanding mortgage service offers another growth opportunity. The company does, however, face increased competition from Trulia (TRLA). ...

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 made for Q3 so far were:

  • to expect a positive reaction to Google's (GOOG) results.
  • to expect a negative reaction to LinkedIn's (LNKD) results.
  • to expect a positive reaction to 3D Systems (DDD) results.
  • A daily investment service that is committed to creating long-term wealth for its members, BullMarket.com's Recommended List of stocks is up 104.9% from 2009-2012 versus a 57.9% return for the S&P, a 47.0% 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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