Tracking earnings
Many of you have emailed asking more questions about the earnings breakout. I have written extensively on it previously for last 18 months or so. There are no major secrets to it. It is just plain vanilla step by step process.
Lets look at today. I went through the IBD earnings list on page A11. Noted two stocks meeting the earnings criteria of 100% plus growth AZZ and SLP. Looked at their 65 days growth. Both had rallied in to earnings. AZZ has less of a rally. AZZ was anyway in my list of stocks which have reacted positively to earnings in previous one year.It had earning acceleration some quarters back. So I see no opportunities for today.
The earning season is just staring so opportunities will present themselves in next 4-6 weeks. I do not listen to earnings call, or any other thing, I look at just the earnings, previous price action and put selected stocks on watch for next day. If they have high volume breakout in first few hours, I buy.
Lets look at today. I went through the IBD earnings list on page A11. Noted two stocks meeting the earnings criteria of 100% plus growth AZZ and SLP. Looked at their 65 days growth. Both had rallied in to earnings. AZZ has less of a rally. AZZ was anyway in my list of stocks which have reacted positively to earnings in previous one year.It had earning acceleration some quarters back. So I see no opportunities for today.
The earning season is just staring so opportunities will present themselves in next 4-6 weeks. I do not listen to earnings call, or any other thing, I look at just the earnings, previous price action and put selected stocks on watch for next day. If they have high volume breakout in first few hours, I buy.
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16 comments:
Pradeep
I know you are reluctant to get into discussing specific stocks, but considering this post is a special case...
EZEM and JEN also met the criteria. Would it be correct to say that the poor sales growth for both of these stocks precludes them from any further consideration?
Criteria is 100% plus earning plus sales 5% plus.JEN, EZEM don't meet that.
Stocks with lesser sales and lesser earnings also go up. it is just an issue of priority and focusing on few things. Other wise one gets overwhelmed.
If I have 100 million to trade I will trade earnings very differently.
TSCO is another kind of earnings trade worth considering for long term holding today. It guided up and might have 20% or more juice from here.
I like MTRX and AGL based on earnings so far..
Why would SIMC and ALCO not meet the criteria.
Can you explain what you considered in TSCO besides guidence increase for 07, pre-annoucing revenue for 1Q 10% higher than estimates and they are set to report earnings on 25th?
Why would earnings pre-annoucement be worth trading, becoz it gets priced in for 25th?
Shiva
You are on right track. Those companies announced few days ago.
Nilay
Earning surprise is positive for near term stock move. Which is the philosophy behind things like Zacks and Value Line.
Earning surprise= the difference between forecasted and actual
Plus stock had not rallied in to earnings.
Sometime it is tricky trading these things because companies release such news in advance and time secondaries. So companies play games with pre announcement.
Why would SIMC and ALCO not meet the criteria.
They are from WSJ data, IBD did not have it. I was referring to IBD only. IBD does not cover foreign stocks.
TSCO is not from the earnings 100% plus list.
It has guided higher that is why it is up, I saw the news early morning and commented on it. Another way to play earnings is by looking at companies beating analyst consensus estimate by significant margin.
Tractor Supply guides above consensus for Q1; raises FY07 guidance Co issues upside guidance for Q1 (Mar), sees EPS of $0.10-0.12 vs. $0.00 Reuters Estimates consensus; sees Q1 (Mar) revs of $559.8 mln vs. $526.65 mln consensus. Co raises guidance for FY07 (Dec), to EPS of $2.49-2.56 from $2.45-2.52 vs. $2.50 consensus; raises FY07 (Dec) rev guidance to $2.7-2.75 bln from $2.7-2.74 bln vs. $2.72 bln consensus.
Pradeep
1. Does it help to remove the companies from watchlist that do not respond positively or haven't rallied coming into 100% plus earnings after say a week or so? That would help have concise list.
2. Unrelated to this post but i wanted to see if you have a better way of maintaining watchlist
In TC2007 how do you track new entries in a scan for example say 100% plus list?
When i run any scan all the stocks have 1 day in the list when sorted by "Tracking days in a list"
Two ways i know are having same scan offset 1 day for comparison or taking daily data into excel and compare.
1 I only keep companies which respond with at least 4% post earning. So if they don't breakout on earnings day, I don't put them in list.
2 I mark "E" on the chart where earning breakout happened for future reference. This I used to do diligently but nowadays, I don't do it as most of the time I know these stocks, but it helps.
3 You have a bug in your TC2007. Contact support, you might have to download some patch or they will send you a file to fix the problem you are describing.
In your criteria, you say that it is 100% plus earnings and 5% plus sales. Are you saying that the earnings should be double and sales at least 5% higher than the previous quarter?
Yes.
My Watchlist for Thursday: APOG & RELL.
Anyone think these make good candidates?
Unless one knows what methodology you used to decide that how can one have any view.
Both were earning acceleration based. APOG reacting positively and RELL negatively. APOG over 5% from yesterdays close with 20day avg vol close to being done in first hour.
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