The Return of the Triple Play

Earlier in the week, we highlighted the return of the ten bagger. Another characteristic that has returned to the market is the "triple play." A stock achieves a "triple play" (coined by Bespoke's founders a few years ago) on its earnings report when it beats earnings estimates, beats revenue estimates, and raises guidance. Over the prior three earnings seasons, the number of companies that reported triple plays out of thousands of stocks was about 1%-2%. Since so many companies have raised guidance this quarter, the percentage of triple plays has jumped to 6.02% (117 stocks out of 1,911). As an aside, 67.9% of companies have beaten earnings estimates, and 37.6% have beaten both earnings and revenue estimates.

So which sectors are leading the triple plays this quarter? If you guessed Technology, you guessed right. As shown below, 12.63% of the tech companies that have reported have achieved triple plays. Health Care, Consumer Staples, and Consumer Discretionary are the other three sectors that have beaten the overall average. Energy, Utilities, and Financials have had the lowest number of triple plays this earnings season.

Stocks that report triple plays are a good starting point for traders looking to buy momentum stocks with strong fundamentals.

Comments

[Allan Frain:]

Well and good.

Recognizing the market rally is not the issue. The questions are whether it is

1) a response to the "green shoots" of recovery or attributable to reckless monetization and wealth redistribution,

and

2) whether it is a head fake or the beginning of a long term trend

Aug 09 01:19 AM