Earnings season is upon us, and strategic investors are bound to find numerous buying opportunities. Stocks often see exaggerated drops in the share price when a company misses earnings expectations by even a couple of pennies. Other times the earnings meet expectations, but if the company gives guidance that looks weak, it also often results in an exaggerated sell-off in the stock.
It makes sense to look for these opportunities, because stocks that are oversold often rebound quickly, sometimes in just days and this can create quick profits for traders or solid entry points for longer term investors. With earnings season in full swing, there are stocks getting major haircuts everyday for what might be just a short term earnings miss. All of the stocks below recently reported earnings and/or guidance that caused the shares to drop substantially. These stocks could rebound in the coming days and weeks:
Johnson Controls, Inc. (NYSE:JCI) shares are trading at $31.50. This company makes a wide variety of products for the shipbuilding, automotive and construction industries. Some of the products include seating for autos, heating and air conditioning systems, instrument panels, and more. The shares have traded in a range between $24.29 to $42.92 in the past 52 weeks. The 50-day moving average is $31.23 and the 200-day moving average is $34.02. JCI pays a dividend of 72 cents per share which gives a yield of 2.1%.
JCI shares dropped about 8% after releasing earnings even though the company reported record sales. It seems investors are concerned with lowered earnings estimates for 2012, after Johnson said a weak euro currency, lower demand from the European automakers, and other factors would take full year estimates down to a range of $2.70 to $2.85. Big drops like this can create nice trading opportunities so it makes sense to buy dips and sell the rallies. Dips to about $31.50 are likely to be good buying opportunities.
Google, Inc. (NASDAQ:GOOG) shares are trading at $587. Google is a leading Internet search engine and also operates a growing number of ancillary businesses. The 50-day moving average is $619.41 and the 200-day moving average is $562.26. Earnings estimates for GOOG are $36.90 per share in 2011, and $43.89 in 2012. The 52 week range is $473.02 to $670.25. Google has a very strong balance sheet and a reasonable PE ratio. Google reported earnings and revenues that disappointed investors. Analysts had been expecting too much, and the stock price ran ahead of itself before earnings. Google is still an industry leader and it has plenty of growth potential. Now investors have a chance to buy at lower prices, thanks to more realistic expectations.
Supervalu (NYSE:SVU) shares are trading at $6.95. Supervalu is a major grocery store company with brands such as Albertson's, and is based in Minnesota. The 50-day moving average is about $7.65 and the 200-day moving average is about $8.27. The 52 week range is $6.26 to $11.77. Earnings estimates for SVU are $1.22 per share in 2011 and $1.25 for 2012 so the PE ratio is about 6 on these shares. Supervalu pays a dividend of about 35 cents per share which is equivalent to a yield of 5%. Supervalu reported weak results that were impacted by restructuring costs and other factors. The company lowered sales guidance and the stock dropped considerably on the news. This stock appears to be better for traders who buy on dips and sell on rallies, rather than a buy-and-hold investment.
Tiffany & Co. (NYSE:TIF) is trading at $61.74. Tiffany is a specialty designer and retailer of premium jewelry and other related products. The shares have traded in a range between $57.11 to $85.50 in the past 52 weeks. The 50-day moving average is $67.42 and the 200-day moving average is $70.10. Earnings estimates for TIF are at $3.65 per share in 2011, and $4.01 for 2012. Tiffany pays a dividend of $1.16 per share which gives a yield of 2%. Tiffany announced just recently that holiday sales were lower than expected. It appears that European consumers in particular, were more cautious in making purchases and this prompted the company to lower earnings guidance to a range of $3.60 to $3.65. The stock dropped and looks like a solid buy for at least a rebound trade. Longer-term Tiffany is poised to benefit from an economic recovery and rising incomes in many emerging market countries.
The data is sourced from Yahoo Finance and Stockcharts.com.
Disclosure: I am long TIF, and I might buy JCI soon.
Disclaimer: The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.