Which Stocks Look Ready to Sink and Surge 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 Priceline.com (PCLN), Home Depot (HD), First Solar (FSLR), Target (TGT), Groupon (GRPN), Dollar Tree (DLTR), Splunk (SPLK), Salesforce.com (CRM), Palo Alto Networks (PANW), Deckers Outdoor (DECK), and Monster Beverage (MNST).

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

Groupon has topped analyst EPS estimates two of four quarters since it IPO'd. During that span, the stock has risen once the next session. ...

Last quarter, Groupon's net loss was -$3 million, or a breakeven per share, in the July-September period. It lost -$54.2 million, or -18 cents per share. Groupon said adjusted earnings equaled 3 cents per share, which was in line with the analyst consensus.

Revenue grew by nearly a third to $569 million, below Wall Street's expectations of $591 million. Groupon had forecast revenue of $580 million to $620 million.

Groupon's growth rate has steadily declined since it went public to great fanfare. Groupon said its revenue nearly tripled in its Q4 2011, its first as a public company. The growth rate declined to 89% in the first quarter of this year, 45% in the second quarter and 32% in Q3.. ...

Outside of earnings, we've been skeptical of Groupon's core business model from the beginning as we think the benefits to its merchant customers are fairly limited and the barriers to entry low. We've seen too many examples of retailers attracting business at a loss using Groupon campaigns. The company says they are the exception, not the rule, but until proven otherwise we think Groupon has a flawed long-term business model that offers very little value to its merchant customers.

We can see the rationale behind the company launching its new payment service. If it becomes another piece of the puzzle that binds local merchants to Groupon it could prove to be a boost for the core business, but it is a crowded field with some strong competition and we don't think it will move the needle much.

The company, however, is testing a local e-commerce marketplace business, where it draws customers via search, not through emails. This could be a growth driver and eventually help change the face of the company, particularly as it looks to integrate it with mobile, where local search accounts for nearly half of all inquiries. ...

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 Q4 so far were:

  • to be bullish on Netflix (NFLX) ahead of earnings.
  • to be bullish on Home Depot (HD) 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.)

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