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This week will be the third week of purchasing stocks before earnings with an initial investment of $50,000. Last week was much better than the first week, which only returned $798 on the $50,000 investment. And I believe this week will be much better than the last. The further we go into this earnings season, the more we can learn about how the market is reacting to the reports. Therefore, I believe the stocks that I am buying during this upcoming week will return larger gains compared to the previous two. Below is a look at the last two weeks along with my picks for the upcoming week.

Oct. 24 - 28 Results
Stock Amount Purchase Buy Price Sold Sell Price Gain/Loss
NFLX $7,500 Oct. 20 $110 Oct. 28 $84 ($1,773)
CAT $10,440 Oct. 20 $83.02 Oct. 28 $97.61 $1,834
V $10,440 Oct. 26 $90.10 Oct. 28 $95.60 $637
GR $10,440 Oct. 25 $122.17 Oct. 27 $122.90 $62
GT $12,000 Oct. 26 $13.15 Oct. 28 $15.34 $1,998

The chart above shows the five stocks that were chosen last week before earnings. The buy and sell prices show when I purchased the shares that are based on an initial $50,000 (pretend) investment with the combined gains from week one. To better understand how these stocks were picked and my stance on earnings click here for week one and click here for week two.

After week one my gains were 1.60% but during week two my gains were 5.4% for a total of return of 7.2% over the last two weeks, or a $3,579 return on a $50,000 initial investment. I believe there are a few reasons that the gains increased: The market performed much better and I had adapted to what I had learned about market reaction during the first week.

After the first week I mentioned that some stocks fell with the market despite strong earnings. My examples were Citigroup (NYSE:C), JPMorgan (NYSE:JPM), and Bank of America (NYSE:BAC). I also experienced this first hand with my investment in Harley Davidson (NYSE:HOG) which fell 8% after earnings but is now trading with a gain of 7.5% since the day before it announced earnings. Therefore I suggested that if earnings are strong but the stock were to drop, then investors should wait it out and give the stock time to recover. Because sometimes a stock's initial reaction is the result of panic and investors not having time to understand the news before a reaction takes place. I believe that by understanding this concept and being patient during week two allowed me to sell at a higher price and buy at a lower point.

During week two I learned that a stock with a negative outlook should be avoided. If it wasn't for my investment in Netflix I would have returned 9% during week two compared to 5.4%. Therefore in week three I will avoid stocks with a high level of uncertainty. Even though NFLX was a small position, it still drastically affected my returns, and even though I thought it had potential for large gains I did not consider its potential for loss if earnings were missed. The bottom line is that I will avoid stocks that could post large losses with earnings being the icing on the cake to pessimism surrounding the company. Instead, I will buy stocks with consistency, long-term potential, and a growing product. I will also purchase more than the usual 5 stocks so that risk is slightly lowered because my total investment is now $53,579 after the gains during week two. So let's take a look at where I am putting my money this week, Below are 6 stocks I am buying, and I have listed the stocks least to greatest by the amount of the $53,579 into each stock, which means I am listing them by my level of confidence in each security.

I have been particularly bearish regarding oil stocks during earnings this quarter. There has been a large percentage of oil companies who missed expectations with the price of crude much lower during Q3. However, I believe that EOG Resources (NYSE:EOG) has the potential to exceed expectations and post gains after the company announces its earnings report. EOG will report earnings on November 1 and is expected to announce $0.78 per share. I am bullish that this company can meet expectations for two reasons: It's increased revenue at a remarkable rate year-over-year, including almost doubling during its previous quarter. In addition its operating and profit margins have both trended higher during each of the last three quarters.

EOG is my favorite stock in the oil & gas operations industry for the next 5 years. It has a great management team and has been very successful in drilling, and has a large amount of acreage. The stock is trading 10% lower during the last three months and is 21% off its 52 week high, which I believe is a strength as earnings approach. Yet despite all of its strengths, I am not confident enough to invest a large percentage of my $53,579 planned investment. Therefore I will invest $4,000 in EOG, which increases my security while allowing me to take advantage of a stock that has been beaten down. And if oil had been higher during the last quarter, this stock would probably be my largest holding-- which means I will most likely hold this stock long after its earnings are announced.

Communication stocks have been hit or miss during this earning season, yet I believe that CenturyLink (NYSE:CTL) is presenting a great opportunity to buy. CenturyLink has consistently met or exceeded expectations with 14 of its last 14 earning reports. The company's earnings are usually very close to expectations with the majority being less than $0.03. However the market expects very little from CenturyLink's earnings report because the company recently lowered its guidance. CenturyLink significantly increased its revenue guidance but nearly cut its earnings guidance in half. The company will announce earnings on November 2 and is expected to post an EPS of $0.34, which is 59% less than last year's earnings.

I believe that analysts have given CTL a target that it can easily achieve since it has been lowered from $0.64 over the last three months. I expect revenue to drastically increase and for the company to possibly raise guidance. Much like EOG, I believe CTL is presenting a good opportunity for a long term investment. I also believe the recent acquisition of Savvis will much improve CenturyLink's earnings by increasing its market share in managed hosting and cloud services. CenturyLink is already making a splash in the U.K. with its newly acquired company by delivering enterprise-class cloud solutions. I expect this new service is just the beginning of CenturyLink's presence in the U.K., which still relies heavily on an IT infrastructure. This growth in the U.K. is why I believe the company could potentially raise guidance-- which would have a big impact on the stock. Yet the good news is even if the company does not increase its guidance or misses the low expectations, I doubt it will fall by a large margin. The company is roughly 16% off its 52 week high with a P/E of 15. In addition, the stock has a yield of 8.07-- which is one of the best in the market. Therefore, with a modest trading level and a solid yield, I believe the upside is great and that investors will be more hesitant to sell regardless of earnings. I will invest $7,000 into CTL because I believe it can exceed low expectations with an encouraging outlook in the U.K.

IPG Photonics (NASDAQ:IPGP) will announce earnings on November 1 and is expected to post earnings of $0.64 per share. IPGP is what I consider an under the radar stock that is growing faster than most companies within the market. IPGP has met or exceeded expectations each of the last 7 quarters, and usually by a large margin. The company provides high power fiber lasers for diverse applications in numerous markets. Its lasers are used for cutting, drilling and welding, among others, and has a large presence in several industries which include medical and communications.

IPG Phontonics is a behind-the-scenes company with advanced technology that is growing and showing no sign of slowing down. During its most recent quarter revenue grew by 81% and income nearly tripled with $0.63 a share. Yet despite the fact that this company usually posts better earnings during the later quarters of the year, analysts are expecting $0.64-- which is considerably low. IPG Photonics is a company that grows by a large margin quarter-over-quarter-- at least $0.06. Therefore, I believe the company will easily exceed these modest expectations and that it will trend substantially higher. IPGP is currently trading 27% off its high, and has given investors no reason to believe it would miss expectations, or that business is declining. As a result, I will invest $9,000 in a company that usually exceeds expectations by a large margin.

The best performing stocks during this earnings season has been retail and restaurant stocks. During earnings the restaurant stocks have exceeded nearly all estimates, and since they have performed so well I will invest in the restaurant company that has the highest EPS growth among all restaurant companies; Red Robin (NASDAQ:RRGB). Red Robin is not necessarily my favorite stock within the industry. However, I believe it's well positioned to exceed expectations with an EPS target of $0.22 in a stock that has lost 26% of its value during the last three months. During its previous quarter, earnings beat expectations by 32.6% and during the two quarters prior the company beat expectations by more than 100%. It appears that analysts can't account for the company's growth but they are getting better and the margins are getting closer. Yet the $0.22 estimate would be more than half of its previous quarter, and RRGB hasn't indicated that earnings would decline. I believe that analysts are far from the company's earnings and that RRGB, like the rest of the restaurant companies, will easily exceed expectations and post large gains following earnings. I am investing $10,000 into RRGB and I will be looking to see how many stores the company has added during the quarter and its revenue growth year-over-year.

My largest investment for this upcoming week is between two companies; Sirius XM (NASDAQ:SIRI) and Jazz Pharmaceuticals (NASDAQ:JAZZ). I will invest $11,790 in each stock, which is the remainder of the $53,579 pretend investment. Of each stock on this list, JAZZ and SIRI present the perfect mix of risk versus reward in a fast growing company most likely to post gains.

Sirius XM will announce earnings on Nov 1 and is expected to post $0.01 per share. Sirius' revenue has been consistently rising over the last year and I expect it to continue when the company announces earnings. Sirius comes standard in 65% of all vehicles that are manufactured in the U.S. and the company has taken advantage of high sales by improving its retention rates. I believe the high retention rates, along with increased sales, will result in better earnings for SIRI -- and possibly higher guidance with an encouraging outlook in the auto industry.

The company is on a level by itself with no real competition. It's one of the only companies whose product is given to the consumer with the opportunity to enjoy the service before having to subscribe. I believe that guidance will be exceptional for Sirius, which is raising prices and preparing for the Sirius 2.0. There is a great deal of excitement surrounding the company's future, and as auto sales continue to rise, I believe Sirius will rise as well. It also beat or met expectations in each of the last three quarters and the stock is trading with a three month loss of 12%. Therefore, I believe the upside is greater than the downside, and that there is little risk associated with SIRI, while the likelihood for the company to exceed expectations is high.

Jazz Pharmaceuticals is expected to post an EPS of $0.84 on Nov. 1, when it announces earnings. The company has exceeded expectations in each of its last four quarters with strong growth from its lead drug Xyrem. Xyrem is growing at an incredible rate with $56.2 million in sales last quarter, a 67% year-over-year gain. The stock has gained nearly 280% over the last year and I believe it's still undervalued. During the last quarter JAZZ increased revenue by nearly 60%, and posted $33.2 million of income compared to a loss of $6.39 million year-over-year. JAZZ has drastically improved its balance sheet with $102.4 million in cash compared to $9.57 million year-over-year, and has lowered its debt-to-assets ratio to 20% from nearly 60% in one year.

The growth of this company is unprecedented and with two fast growing products and three additional products in its pipeline I don't believe it will be slowing down anytime soon. Its fastest growing product, Xyrem, continues to post large gains quarter-over-quarter making it difficult for analysts to appropriately estimate its earnings. Because of a report that JAZZ was warned by the FDA for not reporting side effects within 15 days, the stock has fallen 10% from trading near all time highs. Before this news was announced JAZZ was trading with a gain of 20% throughout the sell-off within the market. It has a great deal of strength with investors that rarely sell, and a high level of institutional ownership. Therefore, I believe this stock is a safe play in a company that is growing remarkably fast with a P/E of 19 and new gains that are almost certain.

Each of the six companies announced earnings in late July to mid August during the heavy selling within the market. Therefore, with the exception of JAZZ, each stock posted a loss following earnings, yet exceeded or met expectations. And most of these stocks are trading significantly lower than when it announced earnings during the previous quarter. Therefore, I believe that each of these stocks presents a great opportunity for an investor to take advantage of a cheap fast growing stock. In early August, stocks were falling regardless of earnings because there was such a high level of pessimism within the market. However, each of these companies are announcing earnings during a time of new found optimism surrounding the economy, a time when the major indices are posting record gains and stocks are regaining loss. As a result, I believe that each of these stocks has the potential to post large gains following earnings, assuming that expectations are met.

Disclosure: I am long JAZZ, SIRI, IPGP, RRGB, CTL, EOG.

Additional disclosure: As with any investment, due diligence is required. The opinions in this article are not intended to be used to make a particular investment or follow a particular strategy. All EPS estimates were obtained from CNBC along with past performance.