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 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 Alcoa (AA), Yum Brands (YUM), Costco (COST), Google (GOOG), Annie's (BNNY), Groupon (GRPN), Wells Fargo (WFC), and JPMorgan Chase (JPM).

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

Alcoa has topped analyst EPS estimates five of the past eight quarters, meeting the consensus once and missing twice. Over that span, the stock has risen the next session three of eight quarters. Seasonally, the stock has risen two of the last four years.

Last quarter, the company reported a second quarter net loss of -$2 million, which was equivalent to breakeven on a per-share basis. Last year, it reported a second-quarter profit of $322 million, or 28 cents per share. Excluding $61 million in charges, Alcoa said it earned 6 cents a share.

Revenue slipped by -9% to $5.96 billion.

Wall Street analysts were expecting the company to report a nickel per share in adjusted EPS on sales of $5.83 billion.

"Although aluminum prices are down, the fundamentals of the aluminum market remain sound with strong demand and tight supply, and Alcoa is successfully capitalizing on accelerating demand in high-growth end markets such as aerospace and automotive," Klaus Kleinfeld, chairman and CEO, said in a

statement.

Alcoa said revenue grew across global end markets, including packaging (5%), aerospace (4%), and commercial transportation (3%), compared to first quarter 2012. ...

Outside of earnings, we've never been big fans of Alcoa because it has long been an erratic performer. If aluminum prices rise and cyclicals get a lift off a QE3, the stock could do well. However, we'd also note that there are often a lot of aluminum alternatives, such as plastic for some applications and steel for others, which can also keep prices down. That, combined with the current aluminum surplus, keeps us on the sidelines. ...

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 were:

  • to be bullish on Green Mountain (GMCR) ahead of earnings.
  • to be bullish on Fusion-IO (FIO) ahead of earnings.
  • to be bearish on Facebook (FB) 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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