Here are the three mega cap gainers from Tuesday and the trading strategy for them going forward.
Bank of America (NYSE:BAC) gained ~4.7% yesterday after its upbeat investor day. CEO Brian Moynihan provided a high level view of the company's earnings power, implying a normalized EPS of $2.30-2.60, which was above most of the sell side estimates. Mr. Moynihan also highlighted company's commitment to "no acquisitions" and that current management will concentrate on integrating several large acquisitions, which the company has done over past several years. He also focused on growth opportunities outside U.S. and management's willingness to return excess capital to shareholders through dividends [though any material return of excess capital to shareholders is still sometime away (2013-2014)].
BAC's stock price reacted very positively on better than expected normalized earning potential. However there is still a some room for the stock price to go up from here as sell siders adjust their estimates. The stock is likely to outperform in the near term.
Oracle (NYSE:ORCL) gained 2.01% on Tuesday. The company is due to release its Q32011 earnings on March 24. Although Q3 is a seasonally soft quarter for Oracle, it is likely to exceed its constant currency sales target as the rebound in software license growth continues. Expectations are a bit low thanks to the cautious comments regarding enterprise spending by CISCO Systems (NASDAQ:CSCO), and ORCL's result might be received positively by the markets.
China Life Insurance (NYSE:LFC) gained 2.2% on Tuesday. It plans to release its results after the market closes on March 22. Given the pick up in total monthly premium reported towards the end of 2010, China Life could potentially surprise positively with better than expected first year premium growth and NBV expansion. 4Q10 equity market rally is also likely to have benefited its investment portfolio.The stock is expected to outperform going forward in the near term.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.