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

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 Kinder Morgan Energy (KMP), JP Morgan Chase (JMP), eBay (EBAY), Goldman Sachs (GS), Citigroup (NYSE:C), Intel (INTC), and Bank of America (BAC).

Here is just a tiny sample of what BullMarket.com wrote about Goldman Sachs: Goldman has surpassed analyst EPS estimates five of the past eight quarters, missing the consensus twice and meeting it once. During that time, the stock has risen the next day only three of eight quarters. Seasonally, the stock has risen twice in the past four years. ...

Last quarter, Goldman said it earned $1.5 billion, or $2.85 per share, in the third quarter, compared with a year-earlier loss of $428 million, or 84 cents per share. The quarter included a charge to reflect the rising value of Goldman's own debt, which reduced earnings by $370 million.

The prior-year period included the cost of buying back preferred stock from Warren Buffett, as well as mark-to-market losses on Goldman's portfolio.

Revenue jumped 133% to $8.35 billion from $3.59 billion in the same period last year.

Analysts expected earnings of $2.12 a share on revenue of $7.30 billion.

Revenue at Goldman's investment banking business rose 49% to $1.16 billion from the third quarter of 2011. The increase was driven mainly by debt underwriting, which surged 177% from last year. Underwriting fees from all sources more than doubled to $655 million. Advisory fee revenue slipped slightly to $509 million.

Fixed income, currency and commodities (FICC) client execution revenue increased 28% to $2.22 billion from the third quarter of 2011.

Revenue in equities fell 16% to $1.96 billion from the year earlier period. ...

Outside of earnings, Goldman has long been the premier investment bank. However, it's also been the poster child of anti-Wall Street sentiment as well, and like many financial firms, it has had to adjust to a changing regulatory landscape (with new rules such as Basel III, Dodd-Frank and the Volcker Rule) that came as a result of the financial crisis.

That said, Goldman should benefit from an improving capitals market next year, and the stock currently trades just above its tangible book value of around $129. That's well below the nearly 2.5x multiple the stock had historically commanded before the financial crisis. ...
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 Facebook (FB) ahead of earnings.
  • to be bullish on Qualcomm (QCOM) ahead of earnings.
  • to be bearish on J.C. Penney (JCP) 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.)