Earnings candidates
Just to illustrate how I do this, here is what I did in the morning. From the Investors Business Daily Earnings tables, I identified stocks with 100% plus EPS, 5% plus sales, 5 cents plus EPS and stocks which had 100% plus sales. Now here is the selected list after removing REITS
ARAY,Accuray Incorporated (Google Yahoo Earnings Chart)
BNT,Bentley Pharmaceutical (Google Yahoo Earnings Chart)
CRY,Cryolife Inc (Google Yahoo Earnings Chart)
CYNO,Cynosure Inc (Google Yahoo Earnings Chart)
EFJI,Efj Inc (Google Yahoo Earnings Chart)
GMRK,Gulfmark Offshore Inc (Google Yahoo Earnings Chart)
HC,Hanover Compressor Hldgs (Google Yahoo Earnings Chart)
JLL,Jones Lang Lasalle Inc (Google Yahoo Earnings Chart)
MALL,Pc Mall Inc (Google Yahoo Earnings Chart)
MTW,Manitowoc Co Inc (Google Yahoo Earnings Chart)
NVTL,Novatel Wireless Inc (Google Yahoo Earnings Chart)
SNTS,Santarus Inc (Google Yahoo Earnings Chart)
SRP,Sierra Pacific Resources (Google Yahoo Earnings Chart)
THRM,Thermage Inc (Google Yahoo Earnings Chart)
TOPP,Topps Co Inc (Google Yahoo Earnings Chart)
VOCS,Vocus Inc (Google Yahoo Earnings Chart)
Now I will go through this to identify which declared in evening. I will look at after market response and then put these on my IB screen.I will now put a tea pot to boil, look at the stocks 60-20 days move coming in to earnings, look at is this 1 st, 2 nd, 3rd or 10 th acceleration. Will look at the earnings compared to last quarter and shortlist 2-3.
There are 2-3 which might pop from this pre market itself and probably I will be amongst the first few buyers, and I will build my total position by 11 A.M. based on price/volume action. That is one of the reason I do not tell you exactly which one, because in many of the low float variety in these, if someone starts driving it too high pre market itself, then that becomes the benchmark for market makers.
Note: Added JLL,which I had missed initially.
ARAY,Accuray Incorporated (Google Yahoo Earnings Chart)
BNT,Bentley Pharmaceutical (Google Yahoo Earnings Chart)
CRY,Cryolife Inc (Google Yahoo Earnings Chart)
CYNO,Cynosure Inc (Google Yahoo Earnings Chart)
EFJI,Efj Inc (Google Yahoo Earnings Chart)
GMRK,Gulfmark Offshore Inc (Google Yahoo Earnings Chart)
HC,Hanover Compressor Hldgs (Google Yahoo Earnings Chart)
JLL,Jones Lang Lasalle Inc (Google Yahoo Earnings Chart)
MALL,Pc Mall Inc (Google Yahoo Earnings Chart)
MTW,Manitowoc Co Inc (Google Yahoo Earnings Chart)
NVTL,Novatel Wireless Inc (Google Yahoo Earnings Chart)
SNTS,Santarus Inc (Google Yahoo Earnings Chart)
SRP,Sierra Pacific Resources (Google Yahoo Earnings Chart)
THRM,Thermage Inc (Google Yahoo Earnings Chart)
TOPP,Topps Co Inc (Google Yahoo Earnings Chart)
VOCS,Vocus Inc (Google Yahoo Earnings Chart)
Now I will go through this to identify which declared in evening. I will look at after market response and then put these on my IB screen.I will now put a tea pot to boil, look at the stocks 60-20 days move coming in to earnings, look at is this 1 st, 2 nd, 3rd or 10 th acceleration. Will look at the earnings compared to last quarter and shortlist 2-3.
There are 2-3 which might pop from this pre market itself and probably I will be amongst the first few buyers, and I will build my total position by 11 A.M. based on price/volume action. That is one of the reason I do not tell you exactly which one, because in many of the low float variety in these, if someone starts driving it too high pre market itself, then that becomes the benchmark for market makers.
Note: Added JLL,which I had missed initially.
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35 comments:
Can you illustrate your thought process of narrowing down the selection, by putting up charts of some discards as well as some picks - say 2 of each? That way, we may get a better handle of what to look for? I hope it is not too much of a trouble. Thanks
I also have in my list :
TESS
SPSS
Question : While pre market offers an opportunity to capture more of a move, is it not risky to be the first few buyers not really knowing how the market would react ?
JS
SRP, MTW, NVTL, CRY, GMRK, BNT, VOCS, CYNO discarded for either too high float or price growth going in to earnings.
Rest I am looking at in detail.
Amit
But if it is neglected and , if this is first or second earnings acceleration and price has not rallied in to earnings, I know it is going to go up. That is simply the way market behaves, earnings season after earning season.
Thanks for providing the discards list. But I see only ARAY and MALL up in Pre mkt. Does one buy only those that are up or buy even those that are not moving/or are down in spite of EPS break out?
Do not buy unless you understand the strategy. I have not bought anything yet. The good ones have 100000 plus volume pre markets.
pradeep: while 100 eps criteria is clear, i do not understand the rest. could you break it down more. looking at some of the choices. ibd has down arrows in them, depicting declining growth acceleration. however, to me what is important is understanding the 5%plus 5 part of the sentence. thanks. leont
1 Earnings up 100% or more
2 sales up 5% or more
3 earnings are more than 5 cents
Forget the arrows.
to be specific. 5%plus sales, 5cents plus eps?.where in ibd is the 5 cents plus sales?.looked at the column, yet, i can't find it. tks
got it, tks
Pradeep,
Both ARAY and EFJI do not meet the 5 cents criteria. How come you put them on the list? Would you tell us later today what 2 - 3 stocks and why you picked so we can compare our stock picking logic with yours?
ARAY, EFJI, both sales above 100% .
YBN
Please read all posts in the earnings series.
From my earlier post:
A variation of the earnings trade is also an useful addition to your trading arsenal. There are a handful of companies which have at any given time very high sales growth. They may or may not have earnings. This happens in biotech, pharma and high technology field. In these kind of companies the sales acceleration acts as a catalyst, kicking off multi month rallies post earnings.
So in addition to 100% plus earnings , I track companies which had a 100% plus sales/revenue growth and recent quarter sales/revenue are above 10 million. Now some of these might have good earnings growth, but the hyper sales growth alone acts as a catalyst in such cases. Now if these companies had no rally prior to the earnings season and show sudden revenue acceleration, you will notice they immediately jump. Again the rallies in such companies last for few quarters or years.
The biggest winners in a year typically come from such hyper growth companies.
I thought all conditions had to be met, 100%, 5% and 5 cents to be in the list.
sorry, forgot about it...
Morning.
shedding lots of light...
we know how you pick stocks and a little about how you buy them.
what about selling/taking profits?
thanks!
Looks like ARAY is the leader in today's list. Too late, I guess to jump in?
i got in VOCS two days ago - liked the low vol pullback
Pradeep , any pb on jll?
HC, SNTS, MALL, THRM, JLL, I put in list. Took JLL, ARAY, MALL. I am eying THRM, but it has no volume.
Walter
Stop at 2 days low and I am looking for 20% plus profits on earnings. I will sell at least some part at 20%.Rest trail.
The earnings trade which work, have multiple day/week rally, so I trail with stop.
thanks - now that you mention it, i think you did tell me that before...
i cant keep track of all the info - and thanks for your patience
jll looks like cup and handle bo, with 14 point target from high to low , is that about right Pradeep ? if so 14 from bo of handle is about 121 , you buy any thing today ?
Already bought ARAY, MALL, JLL
Your strategy and the update on stocks discarded from the list before mkt opens, helps narrow the field to pick winners. Hope you can continue this on a daily basis, an early morning list, followed by the discards by 9am, will be great, at least during the earnings season. Thanks a lot!!
Instead of waiting till next morning to get IBD, you might want to see the wsj site http://online.wsj.com/mdc/public/page/2_3024-digest_earnings.html
They nicely consolidate all the earnings for the day and its very easy to identify stocks with 100%+ Income or increase in sales/revenues. This way you can see if any active trading occurred in the stock if the earning was released after close. You have more time to get ready for the next day's action...Here are some of the ones that I am watching today...
CASH
CE
CPO
JRN
KSP
NOV
SPAN
TRCR
VMSI
Pradeep,
got in with a small position in SPSS, working so far for me. I would be interested to know if it did make to your list?
I get IBD electronic edition. It is an exact copy of the paper version in pdf format and it is available in the evening the same day. It is slightly more expensive but there are no mountains paper to trash daily (save a tree).
SPSS does not met the cut offs I use. Stocks with less than 100% earnings also go up. The issue is of reducing the universe. If you take 40% earnings you get 30 candidates after removing based on price growth etc, then again it becomes an issue of how do I cut this down further. So I prefer 100% plus.
The other more critical thing is if you analyze the stocks which really make a move in year of say 300 to 1000 plus kind, they will in most probability have earnings which are in triple digit plus. Also stock which create a frenzied buying post earnings where they make 50% plus move in few weeks tend to be one with 100% plus growth and not 40 to 50% ones.
So I like playing high odds game.
Thanks Pradeep. Wanted to understand the methodology used.
Pradeep,
just a question about a more basic trading method of yours, the "double trouble". Have you made any backtest and checked the performance of this method?.
Thanks
Yes. There are many others who have tested it and added some tweaks to it . You can test it for yourself and see using different rules.
thanks,
and what's the performance of this method?.
Unfortunately, I've no way to do this check by myself now.
It outperforms the market by various % based on what rules one uses. A overall market direction filter improves results.I cannot share other peoples rules and results because they have spent lot of time and effort in testing it and found some very profitable tweaks.
Those who have intention to trade it can find many ways to hand test it.You can go bar by bar on chart and test it.Or use excel. In most cases it is not the lack of tools that prevents us from trading profitable methods, but our intentions.
If you reflect you will notice those who do not want to trade profitably find many creative ways to avoid being profitable.
Same way in life, you will find successful people find many innovative ways to be successful. At the same time struggler find many creative ways to struggle. That is the way our mental models work.
so if one thinks success one will be successful-that is what you are saying PD? and what is "IBD" i am totally new to all of this! a total beginner i started in april and have had little success and a few big failures-i was on the bad side of the akamai fiasco went long instead of short with a twitch of my finger and was too stuborn to buy amazon-i need discipline and some pointers for sure-wife and child depend on it cause i my back is no good from too much construction-but i had adhd as a child and trading uses all my god given gifts adhd is a blessing not a curse-anywho i say thank you for all the good beta and i need to know how to read the charts you put up---the ones with all the X's and O's looks like some sort of predictive filtering going on?also if you could look @ CQB's chart for today-the 2nd- and let me know what in the sam hell went on with there stock???????? by the analysis i did the stock should have tanked by the numbers given-BIGGEST ????? how much market manipulation goes on behind the closed doors of wall street? seems some stocks zig when they should have zagged and versa visa-like i said i am new to all of this-a little help and sympathy from this seemingly great crowd of people on your blog-thanks for your ear :)
Namaste-T
hottpotato,
I strongly advice you to put the money you want to invest in some good fund, as ARTLX or DEFIX or a broad based ETF. If you want to buy stocks, go to gurufocus.com and buy the last big purchases of Buffet, Greenblatt, Rodriguez or similar.
But DON'T begin to trade if you don't understand what you are doing before. Otherwise you'll lose all your money. You must read several good books before on investment and trading, and later just do "paper trading". When all works risk your money, not before.
Regards.
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