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Which Stocks Look Ready to Surge and Sink 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 Herbalife (HLF), First Solar (FSLR), Baidu (BIDU), Sourcefire (FIRE), Visa (V), Mastercard (MA), Yelp (YELP), Hain Celestial (HAIN), Annie's (BNNY), OpenTable (OPEN), Blue Nile (NILE), and LinkedIn (LNKD).

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

Mastercard has beaten analyst EPS estimates each quarter over the past two years. During that span, the stock has risen the next session six of eight quarters. Seasonally, the stock has risen three times in the past four years.

Last quarter, Mastercard reported a 9% increase in revenue for the second quarter to $1.82 billion, which was shy of the $1.88 billion Wall Street analysts were expecting. It was the first quarter in nearly two years that it didn't report double-digit revenue growth and the stock fell on the news.

The company blamed the strong U.S. dollar for the slower top-line growth. Mastercard said its revenue grew by 13% on a constant-currency basis.

The Purchase, N.Y.-based payments processor reported a profit of $700 million, or $5.55 per share, in the second quarter, compared with $608 million, or $4.76 per share, a year ago.

Excluding a litigation charge it booked to cover its share of the settlement of the suit brought against it and rival Visa (V), Mastercard earned $713 million, or $5.65 a share, more than the $5.57 per share Wall Street analysts were expecting.

Mastercard took the $13 million charge to cover legal costs. It had set aside a large amount last year to cover its $790 million share of the settlement.

Purchase volume on Mastercard-branded cards rose 13% worldwide, which was down from 17% growth in the first quarter. ...

Outside of earnings, Mastercard has a long runway for continued growth as the global economy moves from a cash-based system to an electronics payment. The U.S. debit rules will crimp business a bit in 2012, but we don't expect them to inhibit the long-term growth for either Mastercard or rival Visa as the industry appears to be adjusting well. Mastercard, meanwhile, doesn't have as much debit card exposure as Visa, and could take some share.

However, Mastercard does have more exposure to the world's weakest region, Western Europe, as Visa Europe is a separate entity owned and governed by its European member financial institutions. It pays Visa an irrevocable and perpetual license of approximately $143 million per year, payable quarterly. ...

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 Q3 were:

  • to be bullish on Akamai (AKAM) ahead of earnings.
  • to be bullish on Facebook (FB) ahead of earnings.
  • to be bearish on Deckers Outdoor (DECK) ahead of earnings.
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