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 Intel (INTC), Goldman Sachs (GS), eBay (EBAY), Bank of America (BAC), Microsoft (MSFT), Intuitive Surgical (ISRG), IBM (IBM), Google (GOOG), Chipotle Mexican Grill (CMG), and McDonald's (MCD).

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

Goldman has surpassed analyst EPS estimates six of the past eight quarters, missing the consensus twice. During that time, the stock has risen the next day four of eight quarters. Seasonally, the stock has fallen each of the past four years.

Last quarter, Goldman Sachs reported much stronger-than-expected earnings for the fourth quarter. Its EPS more than tripled to $5.60 a share, topping even the most optimistic analyst forecast at the time.

The bank reported that its return on average common stockholders' equity, a measure of how well the firm reinvests shareholder money, rose to 10.7% in 2012 from 3.7% in 2011.

Tangible book value swelled to $134.06 per share, up from $119.72 per share at the end of 2011.

The company's profit was aided by a strong stock market, which boosted trading results, and a $500 million profit from the sale of a hedge-fund administration unit. The bank also slashed costs by cutting 900 jobs over the year and reducing the amount of revenue allocated to compensation to 38% of revenue from 42% a year earlier.

Revenue in Q4 grew by 53% to $9.24 billion from $6.05 billion a year earlier. Total operating expenses grew by 3% to $4.92 billion from $4.8 billion. ...

Outside of earnings, Goldman has long been the premier investment bank. However, it's also been the poster child of anti-Wall Street sentiment as well, and like many financial firms, it has had to adjust to a changing regulatory landscape (with new rules such as Basel III, Dodd-Frank and the Volcker Rule) that came as a result of the financial crisis.

That said, Goldman should benefit from an improving capitals market this year, and the stock currently trades just above its tangible book value of around $130. That's well below the nearly 2.5x multiple the stock had historically commanded before the financial crisis. ...

Just a few of the correct calls BullMarket.com made for Q4 were:

  • to be bullish on Netflix (NFLX) ahead of earnings.
  • to be bullish on Michael Kors (KORS) ahead of earnings.
  • to be bearish on Akamai (AKAM) 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.)

    Rates