We have had a volatile start to earnings season. One positive to this is that volatility based on macro issues often provides buying opportunities in solid stocks. Although I believe this will be a temporary state of affairs for the market as the EU will inevitably step in and remind us they will provide the safety net for eurozone sovereign debt issues. Therefore, the focus on macro issues may provide an excellent buying opportunity for the following five stocks reporting earnings next week. Last week, all five of my earnings picks I detained in an article last Friday beat Wall Street estimates. I believe the following companies are set to beat the Street's earning expectations next week. Please review the summary information table below followed by a brief review of each stock.
Ak Steel Holding Corporation (AKS)
AKS was down 1% today. The stock is trading down 54% from its 52 week high and approximately 30% from its recent high. The company has many fundamental positives. AKS has a forward P/E ratio of 6.16 and an EPS growth rate of 133.96% for next year. AKS has a price to book ratio of 2.17. The stock has pulled back to just below its 50 day SMA. AKS recently raised the price of certain products which should have a positive effect on guidance. The stock is currently resting at the bottom of its six month trading range.
COP was flat today. The stock is trading down 6% from its 52-week high and is currently resting at the bottom of a six month uptrend channel. The company has many fundamental positives. COP has a forward P/E ratio of 7.88 and a ROE of 18.59%. COP has a price to book ratio of 1.44. The stock has pulled back below its 50-day SMA. The company expects first quarter 2012 repurchases under the share repurchase program to be $1.9 billion and the number of weighted-average diluted shares outstanding during the quarter to be approximately 1,293 million. The ConocoPhillips board of directors has approved the planned separation of ConocoPhillips and Phillips 66, effective from May 1, 2012. I see this as a major catalyst for the stock.
Regions Financial Corporation (RF)
RF was down .82% today. The stock is trading down 16% from its 52 week high and is currently bouncing off its 50 day SMA. The company has many fundamental positives. RF has a forward P/E ratio of 8.39 and is trading at half its book value. Regions Financial recently announced the repurchase of $3.5B worth of its preferred stock in a move that pays off the government's investment in full and removes $175M in annual dividend payments for those securities from its books. This is a huge positive for the stock. Several major banks have beat estimates recently as well.
AT&T Inc. (T)
T was up 0.45% today. The stock is trading down 2.47% from its 52-week high and is currently bouncing off its 50 day SMA and the bottom of an upward trend channel. The company has many fundamental positives. T has a forward P/E ratio of 12.15 and is trading at slightly less than two times book value. The company is currently trading at the bottom of its upward trend channel which is bullish technically. A big positive for the stock is the 5.72% dividend yield. T is one of the most widely held stocks. AT&T recently upped the amounts of data it offers in its own packages. Customers who use AT&T's GoPhone service will now be enabled to double their data for the same price. This move is to counter low-cost deals given to prepaid customers by rivals such as Sprint's (NYSE:S) Boost Mobile and Leap's (LEAP) Cricket. I believe AT&T will provide positive guidance for the rest of 2012.
Xerox Corporation (XRX)
XRX was down 0.50% today. The stock is trading down 25% from its 52-week high and is currently just below its 50 day SMA and the bottom of its six month trading range. The company has many fundamental positives. XRX has a forward P/E ratio of 6.42 and is trading at slightly less than book value. The stock has the 2.17% dividend yield and an EPS growth rate for the next five years of 14.50%. The company is currently trading at the bottom of its upward trend channel which is bullish technically. The company has transformed itself and turned around the profit picture. Last quarter the company beat estimates marking the fourth straight quarter of besting the Street's estimates. I expect no different this time.
The market may hand us a great opportunity to get in cheap on the above stocks. The market's focus on macro-economic events rather than company fundamentals may be the reason. Regardless, the earnings expectations bar has been set extremely low for these stocks and I expect them to beat Wall Street expectations. These stocks have great fundamentals, are technically bullish and have positive company specific catalysts for future growth.
Use this information as a starting point for your own due diligence and research methods before determining whether or not to buy or sell a security. If you choose to start a position in any stock, I suggest layering in a quarter at a time on a weekly basis to reduce risk and setting a 5% trailing stop loss order to minimize losses.