The following companies experienced large price movement. Investors were either thrilled as their hard work, patience, and research paid off or investors were devastated. Earning reports can give us the utmost joy or agony alike. They usually set the trend for the next 3 months however their are occasions when trends change and the stock reacts differently. Below are the summaries of what could happen next.
Green Mountain Coffee Roasters (GMCR) reached all time 52 week highs today as revenue rose 126%. I wrote about this company and its potential for large gains before earnings were released. I have always had the idea that until a stock proves me wrong I will continue to support. The company keeps producing better numbers quarter over quarter and year over year. I believe this stock to be a solid investment even with such large gains. The company has a tendency to slightly pull back after earnings, profit taking is expected, which will give investors a good opportunity to rise with the company.
LSI Corporation (LSI) almost saw its 52-week high as the company delivered 2nd quarter results along with an increase in guidance. I am not sold on their guidance of $535-$565 million as the stock trades with a PE over 60. The company has increased net profit year over year but revenue has not increased at a rate in which I like to see, since 2007. The increase in profit shows the operations are improving but I like to see large growth in revenue over years not quarters. The operations have stabilized but I do not see company growth to carry this stock much higher.
Crocs, Inc. (CROX) reached 52-week highs as they announced an increase in net income of 72%. The company also released guidance for the 3rd quarter which was above analyst expectations. Year over year profit margins, revenue, net income, and total assets have all continued to rise. The company has seen gains in excess of 150% over the last year and I do not see them slowing down. Financials are much higher than 2010 for both quarters and the 3rd quarter is expected to deliver the same results of growth. The company is making more money, they have cut down on costs, and they are expanding worldwide.
With a market cap of $2.6 billion it appears the perfect time to buy would be now.
Bank of Ireland (IRE) has seen gains of 63% since July 14th with 13% of the gains coming today, July 28th. The growth today is due to a purchase of 9% of the company's stock by Fairfax. The bank's accumulated gains were due to passing a stress test and avoiding government takeover. I am not impressed by any of these developments. Irish Banks passed a stress test last year only to need billions within months. Avoiding government control is a current event but does not mean it will not happen in the future. The Irish Banking system is a mess and I hope it improves, however the chances of this being the bottom are slim. The banks will probably see much darker days before returning, if they return to profitability.
I would not invest in this company and other investors need to look hard at their goals when making the decision to buy Bank of Ireland or any other Irish Bank.
Akamai Technologies (AKAM) finished the trading day with a loss of 19.13%. The loss was based on earnings which slightly missed expectations. Revenue rose 13% to $277 million which was shy of the $277.8 million that Wall Street expected. The company earned .25 a share against $.20 last year. Based on the drop in price you would think the company missed expectations by a large margin. The company's largest segment Media and Entertainment fell by over $1 million. The company did lower 3rd quarter guidance to $273-$283 million, which is still a gain of 10-13% year over year. The company has continued to produce increased revenue and assets for the last 5 years with the PE trading at 25.11.
I see the stock as a company that continues to increase revenue. I will be curious to see what happens with the Media and Entertainment segment. Overall I see good areas and then areas of concern; I believe an investor will be best served by waiting and seeing the 3rd quarter results before making a judgment or investing as it could go either way.
Sprint Nextel Corporation (S) witnessed its stock lose over 15% throughout the day. The company reported yet another loss even wider than last year. They admitted that the iPhone market has affected their business. The problem with Sprint is not the iPhone, it is their concept of their business.I am not interested in buying this stock until they make an effort to change their identity. The company has too many stores that are lacking in profit. If Sprint would focus on their profitable locations they would post solid quarters with profitability, as a result saving some cash. With that cash they could eventually have the ability to reinvent themselves, but until that day there is no purpose in them remaining open. They are simply paying you to use their product because of their constant quarters of high cost.
Sprint needs to change but until this happens I would not recommend this stock for purchase at any time and I fear this is just the start of a long road ahead. The company has 2.99 billion shares and trades with an Earnings Per Share of -1.02. If the company posted a wider loss, then how long can the company continue at this rate?
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.