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Which Stocks Look Ready to Sink and Surge 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 Monster Beverage (MNST), Herbalife (HLF), SodaStream (SODA), The Cheesecake Factory (CAKE), Toll Brothers (TOL), Wal-Mart (WMT), Nordstrom (JWN), Intuit (INTU), Hewlett-Packard (HPQ), and Abercrombie & Fitch (ANF).

Here is just a tiny sample of what BullMarket.com wrote about Toll Brothers: Toll Brothers has beaten EPS estimates six of the last eight quarters, meeting them twice. Over that period, the stock has risen the next session three of six quarters. Seasonally, the stock has risen twice in the last four years. ...

Last quarter, the company reported its fiscal fourth-quarter 2012 results in early December. Net income rose to $411.4 million, or $2.35 per share, from $15.0 million, or 9 cents per share, a year earlier. The fourth-quarter profit included a net tax benefit of $350.7 million.

Revenue rose by 48% to $632.8 million.

Toll reported that its net signed contracts jumped by 70% to 1,098 units during the three-month period that ended in October. Backlog grew by 54% while its cancellation rate fell to 4.6% from 7.9% a year earlier. The cancellation rate reflects the number of cancellations divided by the number of signed contracts.

The average selling price for a Toll Brothers' home rose to $582,000 in Q4 from $565,000 in the year-earlier period. ...

Outside of earnings, Toll Brothers trades at a premium to its peers on a P/E basis, but we think that is justified given its focus on the premium end of the housing market. It is that focus that makes it a favorite of ours in the sector. While a rising housing tide should lift all of the homebuilders, the reality is that higher income individuals are still in the best position to get financing and close on home purchases.

We also like Toll Brothers expansion in adult communities, high rise condos in cities like New York, and multi-family dwellings where it wasn't previously that big of a player. The depth of its land portfolio is also a big plus. Simply having a number of properties to develop in high-priced Manhattan is a winner, let alone its other holdings. ...
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 Q4 so far were:

  • to be bullish on Netflix (NFLX) ahead of earnings.
  • to be bullish on Michael Kors (KORS) ahead of earnings.
  • to be bearish on Akamai (AKAM) 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.)