Second quarter earnings have shown many unexpected upturns and downturns. Companies like Zynga (NASDAQ:ZNGA) have dropped over 40% (including After Market), while companies like Sprint Nextel (NYSE:S), previously up 20.18%, and Metro PCS (PCS), previously up 36.78%, have unexpectedly jumped. The Euro previously was up 1% to a one week high of $1.2315 after European Central Bank Chief, Mario Draghi, said the bank will do whatever it takes to preserve the single currency. With all these extreme upturns and downturns, it's important to choose companies who have ongoing plans of improvement and show future products and services that will provide great growth potential. The following companies are stars at meeting this criteria:
Tesla Motors (NASDAQ:TSLA)
Warren Buffett has said, "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." As of now, many investors have been fearful of Tesla's widened second quarter loss, causing the stock price to drop from the peak of $35.96 in early July to today's price of $28. This quarter's loss was expected. Elon Musk has put the car deliveries on hold, to fix any possible issues and improve aspects of the Model S to ensure superior quality. By conducting these quality measures, Tesla is preventing incredibly costly problems that have occurred in similar electric drive train cars, such as the Fisker Karma. The Fisker Karma had a recall due to defective batteries that were a fire hazard to drivers. This incident scared away potential customers and has made battery company A123 Systems (AONE) more financially unstable.
Already, the Model S has received exceptional reviews. Motor Trend said it ranked among the top percentile as one of the best cars in the world and other reviewers have compared its performance to that of a Lamborghini. It has a driving range of up to 300 miles, a 0 to 60 time topping at 4.4 seconds, faster than the 2013 Aston Martin DB9, and can fit five adults and two children. Tesla is planning on selling 5,000 Model S this year and 20,000 next year. With over 12,000 reservations, each costing $5,000, Tesla could very well meet these expectations.
Fear from Tesla's second quarter earnings has created a great buying opportunity. For the next couple quarters, Tesla plans to have a continuous jump in revenues and earnings as they ramp up production. For the third quarter, Tesla plans to build 500 cars, while in the fourth quarter, they are expecting to produce 4,500. If Tesla meets their expectations, significant jumps in revenue will occur over the second half of this fiscal year.
All over the media you hear "4G Network" or "4G Wifi," usually meaning the fastest and most technologically advanced Network or Wifi out there. 4G has made a name for itself, but this has already become dated. Broadcom has introduced "5G Wifi." Although this might sound like Broadcom changed the 4G name to 5G for attention, 5G outperforms by a long shot. Broadcom's 5G is 3 times faster than 4G, reaching 1.3 Gigabit speeds. While reaching these speeds, Broadcom's BCM4335 5G chip consumes 6 times less energy. Whether you believe these claims or not, Broadcom's BCM4335 chip and 802.11ac chip are a big step forward in wireless technology.
Broadcom stresses how the 802.11ac chip will be capable of distributing high speed internet to more devices than previous 4G. The company stated "5G Wifi dramatically improves the wireless range in the home, allowing consumers to watch HD-quality video from more devices, in more places, simultaneously.
Broadcom's 5G chips will not be a long wait either. Sample chips are already available and the BCM4335 5G chip will be the only chips used in the next versions of Apple's (NASDAQ:AAPL) iPhone and iPad. Apple exclusively uses Broadcom's chips in all its iOS devices, including, the most recent, iPhone 4s and iPad. Samsung, the largest mobile phone maker, uses Broadcom chips in nearly all their smartphone devices. The next versions of Samsung's (OTC:SSNLF) smartphones will contain Broadcom's new 5G BCM4335 chip. Devices containing Broadcom's BCM4335 5G chip will be on shelves the first quarter of 2013.
As the only company with 5G Wifi chips, Broadcom could see a monopoly situation with its new patented technology. Owning the most technologically advanced combo chips in the Wifi industry, Broadcom has the option to sell its new products at a higher unit price, increasing their profit margin. With the expectation of substantial growth of sales in the smartphone industry, Broadcom will sell a larger volume of chips at a higher profit margin to produce enormous increases in earnings and revenue.
Disclosure: I am long TSLA, BRCM.