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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 3D Systems (DDD), Priceline.com (PCLN), Home Depot (HD), First Solar (FSLR), Target (TGT), Groupon (GRPN), Dollar Tree (DLTR), Splunk (SPLK), Salesforce.com (CRM), Palo Alto Networks (PANW), Deckers Outdoor (DECK), and Monster Beverage (MNST).

Here is just a tiny sample of what BullMarket.com wrote about Target: Target has beaten EPS estimates seven of the last eight quarters, meeting them once. Over that period, 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 Minneapolis-based retailer said it earned $637 million, or 96 cents per share, for the quarter that ended October 27th. It reported $555 million, or 82 cents per share, in the year-earlier period.

The company's bottom line in the recently concluded quarter got a 15-cent per share boost from the pending sale of its credit card receivables to the TD Bank unit of Toronto-Dominion Bank (TD).

Excluding that gain and other items, including the costs associated with its planned entrance into Canada next year and some favorable tax items, Target said its adjusted EPS was 90 cents. Wall Street analysts were looking for a profit of 77 cents per share, but they typically include expenses related to Target's entry into Canada. Costs associated with the Canada expansion shaved about - 13 cents from profit, the company said.

Revenue grew by 3% to $16.93 billion, topping the analyst estimate of $16.92 billion. Target's sales on a same-store basis increased by 2.9% during the quarter.

Looking ahead, Target projected that it would report adjusted net income of $1.64 to $1.74 per share for the current quarter. Including expenses related to its entry into Canada, EPS was projected to range from $1.45 to $1.55, which bracketed the $1.51 per share analyst consensus. ...

Outside of earnings, Target's RedCard Reward program has continued to resonate with customers who are increasingly turning to the store more and more for household necessities. Meanwhile, the retailer has done very well with limited-time designer offerings the past year from the likes of Missoni and Jason Wu, helping bring back its fashionably chic reputation and helping apparel sales. Its holiday collaboration with Neiman Marcus came up short of expectations, but its recently launched (February 10th) collection with Prabal Gurung so far has been a hit.

Moving forward, the payroll tax going back up to 6.2% from 4.2% appears to have impacted overall retail sales, and likely surprised a lot of wage earners when they got their first paychecks in 2013. This could negatively impact results some.

While the short term could be a bit bumpy, we continue to like Target's long-term story, as it should benefit from a slowly improving economy, increased REDcard Rewards penetration, and its move into Canada. ...
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.)