Five Possible Earnings Winners

Includes: AMSC, ENOC, F, GMCR, WDC
by: Cabot

By Michael Cintolo

When looking for potential new buys these days, I have two pieces of advice. First, you want to keep it light, as the market has turned weak and likely has more pullback/consolidation/correction/whatever-you-want-to-call-it ahead. So while every stock is different, the market could be something of an ankle weight on many names during the next couple of weeks.

Second, and more important, is to pay attention to earnings; a company’s quarterly report has the ability to change its stocks’ landscape. Translation: A lagging stock can become a leader overnight, and a leader can take a dive just as quickly.

I’m not a big fan of buying a lot of shares right before a firm reports earnings because that’s more gambling than investing … and that’s a risk you don’t have to take! The reason is because strong stock price gaps up on earnings reports often create buying opportunities. A big, 20% or more upmove on earnings from a company with a good story and some sponsorship is usually a good buy right away.

With that in mind, I’m going to give you a handful of stocks to watch later this week and next for potential gap up buy opportunities. (Just to be clear, I’m not predicting these stocks will gap up … but if they do, they’ll likely motor higher for weeks):

Green Mountain Coffee Roasters (NASDAQ:GMCR) reports Wednesday (January 27) night; the firm has an outstanding razor/razor blade story that I’ve written about many times. If the stock can gap above 86 (preferably higher) on Thursday, it would be worth a nibble.

Ford Motor (NYSE:F) remains a powerful turnaround story that many investors are underestimating. Earnings are due out Thursday (January 28) morning, and while we don’t anticipate a huge gap on this super-liquid name, a strong move that easily clears 12.15 could be interesting.

SanDisk (SNDK) isn’t early in its overall upmove, but this maker of solid-state (flash) memory broke out of a base in December and quickly spiked nearly 50%. That’s a blast-off sign, and it’s likely SNDK has more upside ahead … assuming earnings on Thursday evening please investors. A powerful move above 32 would be tempting.

American Superconductor (NASDAQ:AMSC) is reporting on February 2, and has a history of big moves on earnings. A gap above its recent high of 44 is unlikely, but any decisive upmove into the low 40s should at least put the stock on your Watch List if it’s not there already.

Lastly, EnerNOC (NASDAQ:ENOC) is a small company that’s a leader in demand response services, signing up many corporate customers on one hand, and utilities on the other. When the utility is seeing a surge in demand, EnerNOC is able to have its corporate customers cut back on power usage, avoiding brownouts. There’s no earnings date yet, but it’s likely to come in mid-February. The stock has pulled back recently, but any gap up through 37 would be highly bullish.

One thing to remember is that every earnings season brings some new leadership, usually in the form of strong gaps up. So it’s just a matter of keeping an eye out every morning for potential big winners that are beginning new upmoves. Hopefully one or two of the above stocks will do just that.