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 25- to 40-page Earnings Preview report for the week ahead each Friday.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Herbalife (HLF), Coach (COH), 3D Systems (DDD), Whole Foods (WFM), SodaStream (SODA), Mastercard (MA), OpenTable (OPEN), LinkedIn (LNKD), Enterprise Products Partners (EPD). and First Solar (FSLR).

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

Coach has beaten analyst EPS estimates seven of eight quarters over the past two years, missing estimates once. During that span, the stock has risen the next session three of eight quarters. Seasonally, the stock has fallen each of the past four years.

Last quarter, the company posted a profit of $238.9 million for its fiscal first quarter, or 84 cents per share, compared with $225.0 million, or 77 cents a share, a year earlier. The results topped Wall Street forecasts by 4 cents per share.

Revenue rose 7% to $1.19 billion, just ahead of the $1.18 billion Wall Street consensus.

Sales at its stores open at least a year in North America, still the company's largest market, edged up by 1%, well below the +3% consensus.

Leather handbags and handbags priced at more than $400 were strong once again.

International sales rose 6% or 14% on a constant currency basis. Sales in China rose about 40% on double-digit same-store sales growth. In Japan, its second biggest market, sales declined -14% in dollars, but were even in constant currencies.

Coach's gross margins increased 35 basis points to 74.1%. SG&A expenses as a percentage of net sales were 44.8% versus 43.3% last year. ...

Outside of earnings, Coach has been struggling recently, as brands that have a broader fashion imprint, such as Michael Kors (KORS) and Tory Burch, have been eating into Coach's handbag market share.

In response, Coach has been looking to transform itself into a lifestyle brand, and last quarter footwear was a standout for the company. That is important because it provides evidence that the company can indeed transform itself into a full- fledged lifestyle brand and not be solely reliant on handbags. The company also has solid international growth opportunities, and the brand is already gaining popularity in Asia. ...

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 Q2 so far were:

  • to expect a positive reaction to Facebook's (FB) results.
  • to expect a positive reaction to Apple's (KO) results.
  • to expect a negative reaction to NetFlix's (NFLX) 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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