Which Stocks Are Poised to Pop and Drop 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 Apple (AAPL), Netflix (NFLX), Deckers Outdoor (DECK), Yum Brands (YUM), Cree (CREE), Coach (COH), Qualcomm (QCOM), F5 Networks (FFIV), Akamai (AKAM), Starbucks (SBUX), Baidu (BIDU), and Amazon.com (AMZN).

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 risen three of the past four years.

Last quarter, the company posted a fiscal Q2 profit of $352.8 million, or $1.23 per share, compared with $347.5 million, or $1.18 a share, a year earlier. The results missed Wall Street forecasts by 5 cents per share.

Revenue rose 4% to $1.50 billion, shy of the $1.60 billion Wall Street consensus.

Sales at its stores open at least a year in North America, still the company's largest market, fell by -2%, well below the +3% consensus.

Leather handbags and handbags priced at more than $400 were strong, while logo and mixed material items underperformed. ...

Outside of earnings, Coach has been struggling recently, and the all important holiday quarter didn't live up to expectations, with North American same-store sales down. We also think the fact that logo products were weak could be a sign that the brand is losing some popularity to newer, cooler competitors. On the plus side, China remains very strong and margins remain robust.

The company's planned lifestyle brand transformation looks interesting, and while Coach wouldn't admit it, it looks like it could be in response to competitors like Michael Kors (KORS) and even a Tory Burch, both of which are believed to be taking customers away from the firm and have a broader fashion imprint. However, adding product lines certainly adds risk, and even though Coach has a strong brand, it's so associated with handbags that we're not so sure how easy it will be to move beyond this niche. ...

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 Q1 so far were:

  • to be bearish on Bank of America (BAC) ahead of earnings.
  • to be bearish on IBM (IBM) ahead of earnings.
  • to expect a muted response to Intel's (INTC) 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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