While many earnings trade will give a one day or few weeks pop, once in a while you get a stock which will give you a major hit. Such stocks have some characteristics:
1 Neglect. They are neglected for many years, 2 plus years ideal.No analyst coverage. Last major rally was several years ago. Or had no major rally in life of the stock.
2 There is dramatic increase is earnings or sales. It is first or second acceleration.
3 Ideal situation, low float.
Now to give you idea of what does the price action look like, lets have a look at one of the stock which is showing up on the Earnings list today VPHM.
VPHM Daily 2005
VPHM Monthly 2005
Here is what happened to VPHM in 2005 earnings season.
Now VPHM is not an isolated example if you look at stocks like NTRI, HANS, BOOM, TASR, GROW and many others during there frenzied rally stage , you will see the same thing. Or more recently FRPT, which is up several hundred % this year, look at its earnings/sales, earnings season kicked of that rally.
One has to wait, wait, and wait for such gems during earnings season. In the meanwhile there are the 10 to 20% few days pop kind of free money opportunities.
Lot of you who are emailing saying oh but this stock was up triple digit but it tanked, are simply not understanding the concept. A 4 th or 5 th or 6 th or 8 th triple digit earnings after a stock already has a run, it can at times launch a blowout move, but that probability is low. What launches a real long duration rally like VPHM is neglect and major surprise.