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Which Stocks Look Ready to Sink and Surge with Earnings Next Week?

the 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, publishes a comprehensive 25- to 40-page Earnings Preview report for the week ahead each Friday.

Over the past year, 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, looks at several popular stocks, including VMware (VMW), Caterpillar (CAT), Broadcom (BRCM), (AMZN), Skywork Solutions (SWKS), Qualcomm (QCOM), Fusion-io (FIO), Facebook (FB), Potash (POT), Mastercard (MA), and Enterprise Products Partners (EPD).

Here is just a tiny sample of what wrote about Skyworks Solutions:

Skyworks Solutions 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 twice in the last four years. ...

Last quarter, The mobile chipmaker posted revenue of $421 million for its fiscal fourth quarter, up 8% sequentially and slightly above its guidance of $420 million. Fourth quarter operating income totaled $103.6 million, with operating margins of 24.6%, up 100 basis points sequentially.

Skyworks earned 53 cents per share in adjusted net income, a penny better than Wall Street expected.

Gross profit was $180.7 million or 42.9% of revenue. Operating expenses were $77.1 million, consisting of R&D expense of $49.2 million and SG&A expense of $27.9 million, yielding $103.6 million of operating income and a 24.6% operating margin. ...

Outside of earnings, Skyworks Solutions is a solid smartphone component maker. Its principal products include power amplifier (PA) chips, which boost the signal coming from a cellular tower. Skyworks has a diverse catalog of more than 800 other components used in a variety of mobile devices.

The stock was hurt this fall due to weaker orders from some handset makers. However, with three of its chips in the iPhone 5 instead of just one in prior iterations, the company should benefit from the iPhone's success. Meanwhile, its broad customer base and large number of products helps insulate it from weakness at any particular suppliers and overall long-term smartphone growth should prove to be the bigger driver for the company in the years ahead. ...

The full 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 made for Q4 so far were:

  • to be bullish on Netflix (NFLX) ahead of earnings.
  • to be bullish on Cree (CREE) ahead of earnings.
  • to be bearish on Bank of America (BAC) ahead of earnings.
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