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Which Stocks Look Ready to Pop and Drop with Earnings Next Week?

the BullMarket.com Staff

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 Intel (INTC), Goldman Sachs (GS), eBay (EBAY), Bank of America (BAC), Microsoft (MSFT), Intuitive Surgical (ISRG), IBM (IBM), Google (GOOG), Chipotle Mexican Grill (CMG), and McDonald's (MCD).

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

Intel has topped the EPS consensus each quarter over the past two years. During that time, the stock has risen the next session four of eight quarters. Seasonally, the stock has risen two of the last four years.

Last quarter, Intel earned $2.47 billion for the period that ended December 29th, which was equal to 48 cents per share. That compares to $3.36 billion, or 64 cents per share, in the year-earlier period. The reported results beat the consensus estimate by 3 cents per share. Intel had earlier warned that its Q4 results would be lackluster.

Revenue fell by -3% to $13.5 billion from $13.9 billion in Q4 2011. The results fell in the midpoint of the company's guidance and were in line with Street expectations.

Intel's PC client group reported a -6% year-over-year drop in revenue to $8.5 billion in Q4 as management acknowledged that tablets were cutting into PC sales. The Data Center unit, however, grew by 7% to $2.8 billion.

The company guided for Q1 sales of $12.2 billion to $13.2 billion, which bracketed he $12.9 billion consensus estimate.

Intel's gross margin in Q4 contracted to 58.0% from 64.5% in the year-earlier period. Management said it expected gross margin would be around 58% in the current quarter and that revenue would grow in the low single-digit percentage range. ...

Outside of earnings, Intel's strength over the years has been its domination of the PC marketplace along with Microsoft (MSFT) in what has generally been referred to as the "Wintel" partnership. But as consumers gravitate to tablets over PCs, Intel has had to scramble to catch up and its increased investments in R&D as well as plants and equipment reflect that need.

But one of Wall Street's main fears is that Intel is building excess fab capacity. The company did announce last year that would do some "foundry" work for chipmakers it doesn't view as competitors on a specialized basis. It would take up some excess capacity, but that is a lower-margin business that is dominated by players like Samsung. The plan has left some analysts scratching their heads.

On the plus side, Intel still has a strong position in the server market and the PC market is still substantial worldwide. Emerging markets offer hope for future growth and the company's forthcoming Haswell line of processors could help Intel make inroads into the mobile space. ...

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 were:

  • to be bullish on Netflix (NFLX) ahead of earnings.
  • to be bullish on Michael Kors (KORS) ahead of earnings.
  • to be bearish on Akamai (AKAM) ahead of earnings.
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