Which Stocks Look Ready to Surge and Sink 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 Herbalife (HLF), First Solar (FSLR), Baidu (BIDU), Sourcefire (FIRE), Visa (V), Mastercard (MA), Yelp (YELP), Hain Celestial (HAIN), Annie's (BNNY), OpenTable (OPEN), Blue Nile (NILE), and LinkedIn (LNKD).

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

Blue Nile has topped analyst EPS estimates two of the past eight quarters, missing estimates five times and meeting them once. During that span, the stock has risen the next session three of eight quarters. Seasonally, the stock has risen twice in the past four years. ...

Last quarter, the online retailer reported net income of $1.6 million for the three months ended July 1st, or 11 cents per share. That was down from $2.8 million, or 19 cents per share, in the second quarter of 2011.

Blue Nile reported a $2 million increase in expenses to $14.9 million, but the result was still better than the consensus EPS estimate of 7 cents.

Revenue rose 13% to $91 million on continued growth in sales of engagement rings. Wall Street was looking for revenue of $88.9 million.

For the full year, Blue Nile said it expects earnings of 70 to 85 cents a share and revenue of $384 million to $417 million, unchanged from previous forecasts.

The company also said it expects to earn 10 cents to 14 cents per share in the third quarter on revenue between $87 million and $91 million. That was shy of the 17 cents per share and revenue of $85.1 million Wall Street was expecting. ...

Outside of earnings, we like Blue Nile's low-cost, highly scalable business model and its ability to play its payables float to boost cash flow. However, the company has not done a very good job executing over the past few years, even as consumer spending has picked up.

The company has increased marketing spending and been more aggressive on pricing to try to gain market share in the non-engagement category. While initial results have been positive, it's also likely to hurt margins. ....

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 Akamai (AKAM) ahead of earnings.
  • to be bullish on Facebook (FB) ahead of earnings.
  • to be bearish on Deckers Outdoor (DECK) 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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