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inside man 55
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Strategic trader, interested in stocks with value and good growth potential, also interested in larger macro trends. Currently I am long AAPL, GTAT, and have a small position in PXLW. I actively trade options and may buy or sell options at any time.
  • Conflicted 4 comments
    Feb 3, 2014 6:20 PM

    It seems quite a few companies I follow beat estimates and revenues for the current quarter but they get slammed when low guidance and high estimates are projected for the coming quarter. This happened to Take Two ($TTWO), Apple ($AAPL), and AMD ($AMD).

    Usually these stocks rise into earnings in expectation of good news and sell of viciously afterwards. Estimate revisions and hype also tend to build into earnings.

    How can we profit from this trend? First, have a list of solid companies to follow that are in your opinion fundamentally undervalued. Buy after earnings when they get beat up. Wait for the stocks to move up. After the stocks move up, sell the day before or the day after earnings.

    In this case it happens to work best when there is uncertainty on the future products a company will introduce. All three of the stocks mentioned above meet this criteria.

    It also did not help that general market sentiment is in a negative direction. That also matters.

    Disclosure: I am long AMD.

    Additional disclosure: I am a frequent trader. I may buy or sell positions in any of the above at any time.

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Comments (4)
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  • Ravinder71
    , contributor
    Comments (31) | Send Message
     
    That also matters? Desi?
    3 Feb 2014, 07:55 PM Reply Like
  • inside man 55
    , contributor
    Comments (919) | Send Message
     
    Author’s reply » Very perceptive, I am of Indian descent. But the stocks would have gone down regardless of market direction. Market direction going down added additional pressure.
    3 Feb 2014, 08:39 PM Reply Like
  • Sean Chandler
    , contributor
    Comments (667) | Send Message
     
    Does seem like a possible trend but I'm sure uncertainty has a lot to do with it - like Amazon. As a long-term investor I don't like to sell my positions unless I am officially cashing out or was only in it for a short run. In the long run you can't really afford to miss out on rallies, however unlikely they may be - but you can always use dips to your advantage.

     

    I know for a stock like AMD in its current condition, a clean track record must be created to appeal to more investors… it'll happen, eventually.
    4 Feb 2014, 12:46 AM Reply Like
  • inside man 55
    , contributor
    Comments (919) | Send Message
     
    Author’s reply » Sean, Amazon is fundamentally overvalued, as they have little hope of having the margins or profits of a retailer. I believe the three I mentioned above are undervalued and generally hated by the market.

     

    I understand your logic, usually a few key days will generate the largest returns for any long-term investor. Look at Take Two today, it has perfectly repeated the experience of Apple and AMD. For me, I prefer to have the cash, miss four earnings days per year, and have a better risk / reward after the stock tanks and finds support. My goal is aggressive though, to generate 2% a week from my investments.

     

    I think you are right on AMD, a clean track record of one to two years is what most investors require. By then the opportunity to have had cheap shares will be gone.
    4 Feb 2014, 10:23 AM Reply Like
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