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Which Stocks Look Ready to Sink and Surge with Earnings This 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 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 Mastercard:

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

Last quarter, increased consumer spending worldwide helped the company report an 8% increase in third-quarter net income to $772 million, or $6.17 per share, from $717 million, or $5.63 per share, a year earlier.

The results topped the analyst consensus estimate of $5.92 per share.

Revenue rose by 5% to $1.92 billion, but fell short of the $1.94 billion analysts had expected.

Mastercard guided for second-half revenue growth to be lower than the levels it saw in the second quarter due to the timing of deals and global economic uncertainty, CFO Martina Hund-Mejean said.

Worldwide gross dollar volume (GDV) was up 14% on a local currency basis. U.S. GDV grew 7%. Debit growth in the U.S. grew at a healthy 14%. Credit volumes in the U.S. grew about 1%....

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 that crimped business a bit in 2012, meanwhile, are now largely in the past and Mastercard didn't have as much debit card exposure as Visa, and could possibly take some share given the new rules. 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 (NYSE:V) an irrevocable and perpetual license of approximately $143 million per year, payable quarterly. ...

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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