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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 Green Mountain Coffee (GMCR), Splunk (SPLK), Tiffany (TIF), Ulta Salon (ULTA), and Lululemon Athletica (LULU).

Here is just a tiny sample of what BullMarket.com wrote about Ulta: Ulta has topped analyst EPS estimates each quarter over the past two years. Over that period, the stock has risen the next session six of eight quarters and was breakeven once. Seasonally, the stock has risen twice in the last four years. ...

Last quarter, Ulta reported a 46.4% increase in net income to $35.0 million, or 54 cents per share, for its second quarter ended July 28th, compared with $23.9 million, or 38 cents per share, in the year-earlier period.

Sales grew by 22% to $481.7 million from $394.6 million a year ago. Wall Street analysts had forecast 51 cents per share in earnings on sales of $473.8 million.

Gross profit increased 80 basis points to 34.8%. SG&A expense as a percentage of net sales was a full percentage point lower than last year.

Ulta guided for Q3 net sales in the range of $494 million to $503 million, compared to actual net sales of $413.1 million a year ago based on assumed comparable-store sales growth of 6% to 8%, compared to a 9.6% increase last year.

EPS was expected to range from 54 to 56 cents per share including -4 cents in costs associated with its plans to open 52 new stores during the quarter. ...

Outside of earnings, Ulta continues to be one of the hottest and most-successful specialty retail concepts going, with a nice runway for continued growth in the number of stores, services, and products it can offer. We like its solid execution and creative promotional strategies, robust sales growth, and management's discipline to grow the company smartly without levering up the balance sheet. ...
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 so far were:

  • to be bullish on DSW (DSW) ahead of earnings.
  • to be bullish on Salesforce.com (CRM) ahead of earnings.
  • to be bearish on Hewlett-Packard (HPQ) 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 33.3% from 2008-2011 versus a -14.4% return for the S&P, a 47.7% 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.)