Which Stocks Look Ready to Surge or Sink After 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 20- to 30-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 Alcoa (AA), Yum Brands (YUM), Costco (COST), Google (GOOG), Annie's (BNNY), Groupon (GRPN), Wells Fargo (WFC), and JPMorgan Chase (JPM).

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

Costco has topped analyst EPS estimates four of the past eight quarters, meeting estimates twice and missing twice. Over that span, the stock has risen the next session three of eight quarters. Seasonally, the stock has risen two of the last four years.

Last quarter, Costco reported that it earned $386 million, or 88 cents per share, for its fiscal third quarter that ended on May 6th. It reported $324 million, or 73 cents per share, in the corresponding year-earlier period.

The quarter included a smaller FIFO charge related to assets of -$6.5 million, or - 1 cent per share, compared with a -$49 million, or -7 cents per share, charge in the prior-year period. There was also a 1-cent per share gain from the "other" income line.

Analysts were looking for 87 cents per share.

Sales rose by 8% to $22.32 billion, which was ahead of the $22.11 billion consensus estimate. Membership fees grew by 9% as higher fees Costco put in place last year are starting to flow through the income statement as people renew their memberships. Revenue from membership fees is booked over the life of the memberships.

Same-store sales excluding fuel and the impact of foreign exchange grew by a consolidated 5%. Its U.S. stores reported 4% same-store growth ex fuel, while sales were up 8% at overseas warehouses on a constant-currency basis. ...

Outside of earnings, Costco remains one of the best-run retailers around and the company should benefit from the continued U.S. economic recovery, especially in California. However, the company has been under some margin pressure the last several quarters, due in part to its own aggressive pricing designed to spur traffic, as well as commodity cost inflation. Inflation has begun to abate some, though, with pressure easing for the past two quarters, which is a positive. ...

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 recent correct calls BullMarket.com made for Q2 were:

  • to be bullish on Qualcomm (QCOM) ahead of earnings.
  • to be bullish on eBay (EBAY) ahead of earnings.
  • to be bearish on Facebook (FB) 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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