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3 Earnings Gaps Worth Buying

Tyler Craig

When looking for the best stocks to buy, investors often look for strong fundamentals. But it’s not just a company’s stability that matters, it’s the growth. Specifically, robust earnings and sales growth. Consider both intertwined metrics the fuel that drives sustainable long-term uptrends and leads to the best stocks to buy.

The revelation of such data during earnings reports makes these quarterly rituals powerful catalysts in a stock’s life. Today we’ll look at three stocks to buy that just scored mighty gaps post-earnings and look poised to continue higher.

Chartists like to say it’s not the news, but the reaction to the news that matters. The fact that traders embarked on a buying binge following the reports of today’s trio is telling. Let’s breakdown the price action in what could be the best stocks to buy right now.

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Source: ThinkorSwim

3 Earnings Gaps Worth Buying: Boeing (BA)

Boeing (NYSE:BA) smashed earnings expectations and promptly rocketed 6.3% higher last Wednesday. The groundswell in volume accompanying the surge marked the largest volume day since last March. This suggests the rally wasn’t a retail trader driven affair, but one born of institutional buying that should have staying power.

Perhaps the most exciting development to the price jump is the potential breakout it created. In 2017, BA stock pointed its nose skyward and hit the afterburners. By the time Santa rolled around, the aerospace juggernaut had climbed 100%. 2018 was the year it digested the enormous gains through the building of a $100-wide base between $300 and $400.

With last week’s post-earnings jump, BA is now knocking on the door of an upside breakout. The range departure could spell big upside for months to come which makes this an attractive stock to buy right now.

Option traders could buy the April $390/$410 bull call spread for $9.10.


Source: ThinkorSwim

3 Earnings Gaps Worth Buying: Advanced Micro Devices (AMD)

After slumbering for a quarter, Advanced Micro Devices (NASDAQ:AMD) has finally awakened. Last October’s earnings release took the momentum out of AMD stock, and it hadn’t been the same since. But last week’s earnings changed that. In the two days following its report, AMD stock soared 27%.

Resistance levels melted in the face of its fiery flight, and AMD now sits at a three-and-a-half month high. On the technical analysis front, the jump is pulling the 20-day and 50-day moving averages higher and places AMD in a prime position for continued upside. The next resistance zone isn’t until $28.50 which is more than 16% above its current price.

While some backing and filling in the short run would be well deserved, you should view any weakness over the coming days as an opportunity for bullish entries.

Given the cheap price tag and high volatility, naked puts are an interesting play here. Sell the March $22 puts for 99 cents.

Source: ThinkorSwim

3 Earnings Gaps Worth Buying: eBay (EBAY)

eBay (NASDAQ:EBAY) entered this year in desperate need for a win. The past three quarterly reports saw substantial gaps lower with downside follow through. As a result, EBAY stock entered 2019 submerged beneath all major moving averages. And that makes January’s upside reversal all the more interesting. It marks a strong turning point and a potential catalyst for a new uptrend to take root.

Since gapping higher last month the stock has held on to the bulk of the gains, basing sideways near resistance. A break over the $35 ceiling should spell more gains to come.

Buy the Apr $34/$38 bull call spread for $1.55.

As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Check out his recently released Bear Market Survival Guide to learn how to protect your portfolio against a market crash.

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