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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 Michael Kors (KORS), Buffalo Wild Wings (BWLD), Blue Nile (NILE), Cisco (CSCO), Zillow (Nasdaq:Z), Whole Foods (WFM), NVIDIA (NVDA), NetApp (NTAP), Deere (DE), and Abercrombie & Fitch (ANF).

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

Blue Nile has beaten EPS estimates two of the last eight quarters, meeting them once and missing five times. Over that period, the stock has risen the next session three of eight quarters. Seasonally, the stock has fallen each of the last four years. ...

Last quarter, the company said its third-quarter profit fell to $1.7 million, or 14 cents a share, but sales surged 20% to $89.8 million.

Analysts had expected a profit of 13 cents per share.

Most of the growth came from the sale of classic diamond jewelry, which had been an area of weakness earlier in the year. The company credited better marketing and promotion for the turnaround.

International sales decreased -3.3% to $13.9 million compared to $14.4 million in the third quarter of 2011. On a constant currency basis, international sales decreased by -1.5%.

The company expects fourth-quarter net sales of between $140-$153 million. ....

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. The company's model, in which it does not physically own or warehouse its diamonds (it has exclusive agreements with diamond suppliers, who show their inventory on Blue Nile's website), also gives it an advantage over competitors, as it can more quickly adjust prices to current diamond prices. This lets it undercut the competition when diamond prices are falling, and preserve margins when they are on the rise.

Blue Nile had solid results last quarter, but over the past few years it hasn't done a great job of executing, even when consumer spending had started to pick up. Last quarter, however, it focused on the non-engagement segment, which paid off. ...

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 so far were:

  • to be bullish on LinkedIn (LNKD) ahead of earnings.
  • to be bullish on Shutterfly (QCOM) ahead of earnings.
  • to be bearish on Akamai (AKAM) 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 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.)