Here are the four earnings reports that we believe could be good for each company's respective stock, and also have the power to definitely add some value in the market.
LDK Solar (LDK): While the long-term outlook on LDK seems to be that it is poised to be a $15 stock, we believe the stock is undervalued at this point. The company is slated to report some strong earnings with a 0.86 EPS vs. the 0.05 EPS one year ago. The company is expected to also report over 125% gain in revenue YoY. Polysilicon producers in China have been reporting strong earnings already, but most of these companies are on the Chinese market. LDK Solar could also be a catalyst for the entire solar sector, which is underperfroming signficantly. With a P/E below 5, a good report can have a drastic impact on price. To play this report, we would like to buy the $10 calls and sell the $14 calls.
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Molycorp (MCP): The rare metals producer has been on a major pullback after moving nearly 100% in the past six months. Yet YTD, the company's move with its recent pullback is very light. The company is slated to report its first quarter in the green on Tuesday. The market's pullback could be setting up for a nice pop after the report. Molycorp is slated to have 1,100% increase in revenue YoY, which has pushed that 100% gain. Yet, as much as many expect MCP to be a high flier, the future P/E on MCP is just over 20. A nice report from it could really be a catalyst to share price and could lift the commodities sector. It is sold off, and a good report could be a catalyst to bring some buyers back into the market. To play this earnings, buy the $65 calls and sell the $75 calls.
Sina Corp. (SINA): The Chinese Internet market is yet another that got hit hard in the last week after good movement during earnings season. Sina is yet to report, and it should report well. We got great reports from Baidu (BIDU), Sohu (SOHU), and Changyou (CYOU) during earnings season. SOHU and CYOU did very well after their reports. Sina is actually slated to report a drop in EPS YoY at 0.27 from 0.34 last year, yet the company is expected to report a nearly 20% rise in revenue. A strong report from SINA could be a catalyst to get this Chinese Internet company going again after its recent selloff. For SINA, we would rather be in equity with a stock play.
The Walt Disney Company (DIS): Out of all earnings this week, Disney is Mr. Consistency. The company continually grows revenue and earnings. The company is slated to move earnings from 0.48 to 0.56 YoY along with another 6%+ growth in revenue. Out of the four, DIS can move the market the most. Disney's earnings will be good for consumer spending and the company infiltrates a lot of markets, which gives it bellwether status. We are interested mostly to see how the company talks about the consumer, and that is the point for catalyst. We are bullish on the fact that consumers are taking trips and attending Disney's amusement parks. The guidance is also key. Does the company see oil and gas prices hurting it? We are bullish here on Disney, and the stock has great upside. To play DIS, buy the $43 calls and sell the $47 calls.