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 25- to 40-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 NetApp (NTAP), Home Depot (HD), Hewlett-Packard (HPQ), Best Buy (BBY), Toll Brothers (TOL), Target (TGT), Dollar Tree (DLTR), Abercrombie & Fitch (ANF) Dick's Sporting Goods (DKS), and Salesforce.com (CRM).

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

Home Depot has beaten analyst EPS estimates six of eight quarters over the past two years, meeting forecasts twice. Over that stretch, the stock has risen the next session six of eight quarters. Seasonally, the stock has risen once in the last four years.

Last quarter, Home Depot said it earned $1.02 billion, or 68 cents per share, for the quarter that ended on February 3rd. That compares with $774 million, or 50 cents per share, a year ago. Wall Street was looking for 64 cents per share. An extra sales week added 7 cents per share to profit in the latest quarter.

Revenue grew by 14% to $18.25 billion, which topped Wall Street's estimate of $17.72 billion. The extra week added approximately $1.2 billion in sales, while Hurricane Sandy added another $242 million, the company estimated. Hurricane Irene the previous year added $130 million to fiscal Q4 2011 sales.

Sales on a consolidated same-store basis grew by a very strong 7%. Same-store sales in the core U.S. market grew by 7.1%. The U.S. same-store sales gain reflected 1.7 points of transaction growth and 5.6 points for growth in the average ticket. Wall Street was looking for 3% growth at stores open more than a year.

The average ticket increase was impacted somewhat by commodity price inflation in lumber and copper, which contributed approximately 80 basis points, the company said. Transactions per ticket under $50, which represented approximately 20% of U.S. sales, were up 0.3% for the fourth quarter. Transactions for tickets over $900, also representing approximately 20% of U.S. sales, grew by 9%, spurred by the strength of generator and appliance sales. ...

Outside of earnings, Home Depot has consistently outperformed rival Lowe's (LOW) over the past few years, and last quarter the company saw its best quarterly comp performance since 2003.

Home Depot is also looking to drive growth in international markets, led by Canada and Mexico as it shifts its focus in China to specialty stores and online operations. Hurricane Sandy and higher commodity prices for copper and lumber helped sales. ...

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 Q1 so far were:

  • to be bullish on Green Mountain (GMCR) ahead of earnings.
  • to be bearish on Deere (DE) ahead of earnings.
  • to be bullish on Netflix (NFLX) 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 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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