Earnings acceleration
When looking for earnings acceleration what to look for is a common question I am asked. Following examples of earnings or sales trends in Reuters are what to look for.
Obviously these are ideal examples and you will only find 20 -25 stocks like this in an earnings season.
Lets look at an ideal example NTRI
Now if you see the 2004 to 2005 comparison of earnings, that is acceleration
Now that is clear earnings acceleration.
Or lets look at RVBD for sales/earnings acceleration
Look at FRPT as ideal example of 100% plus sales acceleration
Sales went up from 10 to 50, now see what happened to price.
The reason to understand it well is if you get it right, per trade profitability can be very high. In the NTRI example the stock was trading at around 1 dollar at the time of first earnings acceleration. It went to 30 in a year after that first earnings acceleration. Similarly FRPT was in single digit when the first sales acceleration happened. When you find NTRI or FRPT kind of earnings acceleration then you get multi week move.
Obviously these are ideal examples and you will only find 20 -25 stocks like this in an earnings season.
Lets look at an ideal example NTRI
Now if you see the 2004 to 2005 comparison of earnings, that is acceleration
Now that is clear earnings acceleration.
Or lets look at RVBD for sales/earnings acceleration
Look at FRPT as ideal example of 100% plus sales acceleration
Sales went up from 10 to 50, now see what happened to price.
The reason to understand it well is if you get it right, per trade profitability can be very high. In the NTRI example the stock was trading at around 1 dollar at the time of first earnings acceleration. It went to 30 in a year after that first earnings acceleration. Similarly FRPT was in single digit when the first sales acceleration happened. When you find NTRI or FRPT kind of earnings acceleration then you get multi week move.
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7 comments:
thanks - been waiting for post like this...
yeah, examples helps. sometimes the first acceleration doesnt seems to spark much activities though
is there earnings acceleration with CRNT?
nice afternoon for ARAY...
nice bullish engulfing candle on GES
Pradeep,
When you are looking at a low float as one of the consideration for buying earning acceleration, is there a point that you consider the float to be too low? Would you buy a stock with a float of under 5M and average of 2 to 5K trade per day If all other criterias are favorable?
I buy stocks below 5 million float all the time, provided they meet my liquidity filter of
AVGC20 * AVGV20 >= 2500
Float has no relationship to trading volume a 5 million float stock can trade 7 million shares in a day or more.
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