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 two years, BullMarket.com used the data it has collected to correctly predict investor reactions for nearly two-third of the stocks it's previewed.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Apple (Nasdaq: AAPL - News), Netflix (Nasdaq: NFLX - News), Caterpillar (NYSE: CAT - News), Akamai (Nasdaq: AKAM - News), Starbucks (Nasdaq: SBUX - News), Amazon.com (Nasdaq: AMZN - News), Potash Corp. (NYSE: POT - News), Cerner (Nasdaq: CERN - News), Buffalo Wild Wings (Nasdaq: BWLD - News), and Baidu (Nasdaq: BIDU - News).

Here is just a tiny sample of what BullMarket.com wrote about Buffalo Wild Wings:

Buffalo Wild Wings is an owner, operator and franchisor of restaurants featuring a variety of menu items, including its Buffalo, New York-style chicken wings dipped in any of its 14 signature sauces or four signature seasonings. ...

The company ended 2011 strong, reporting a 34% increase in Q4 net income to $13.6 million, or 73 cents per share, compared with $10.2 million, or 55 cents per share, last year. Wall Street was looking for 67 cents of EPS.

Total revenue grew by 34.5% to $220.5 million, as sales at company-owned restaurants grew by 36.4% to $202.9 million.

Sales on a same-store basis increased by 8.9% at company-owned outlets and 5.9% at franchised locations. The growth came on top of slightly negative same-store sales in the prior-year period.

Average weekly sales for company-owned restaurants increased by 14.0%, exceeding the same-store sales percentage for the quarter by 510 basis points. The average weekly sales calculation benefited by about 90 basis points from the closing of older, lower-volume locations during the last 12 months as part of a strategy to revitalize restaurants in older markets. The remaining 420-basis-point increase was due to the high unit volumes for company-owned units opened over the last 15 months.

Royalty and franchise fee revenue for the fourth quarter grew by 15.3% to $17.5 million versus $15.2 million last year, with an additional 25 franchise units in operation at the end of the fourth quarter versus a year ago. ...

Buffalo Wild Wings has surpassed analyst EPS estimates seven of the past eight quarters, missing once. During that period, the stock has risen four of eight quarters. Seasonally, the stock has fallen three of the last four years. ...

Outside of earnings, Buffalo Wild Wings remains one of the hottest growth stories in the restaurant sector. The company operates in a crowded space with a bevy of competitors, but we like the effort to expand beyond its Rust Belt core and its simple strategy of selling "wings, beer and sports." Its strong debt-free balance sheet and solid cash position (about $3.30 per share) gives Buffalo Wild Wings the wherewithal to take advantage of weak real estate markets as it expands its footprint. ...

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 has made for Q1 so far were:

  • to be bullish on eBay (Nasdaq: EBAY - News) ahead of earnings.
  • to be bearish on Cree (Nasdaq: CREE - News) ahead of earnings.
  • to be bearish on IBM (NYSE: IBM - News) ahead of earnings.
  • to be bullish on F5 Networks (Nasdaq: FFIV - News) 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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