By Paul Weisbruch, member of the AdvisorShares New Tech and Media ETF’s (Ticker: FNG) portfolio management team
We are waist deep in corporate earnings season now, with a number of the bellwether names in the Social Media, Commerce, and Content groups having already reported. Some of the stocks are in fact trading at new all-time highs post earnings, perhaps squeezing shorts and/or naysayers whom have been concerned about valuations that may be perceived to be “stretched,” and making dip-buying opportunities short-lived if they have even existed at all in the short-term. We continue to look forward on the calendar to earnings reports through mid-August, as a prominent graphic chip maker is still slated to report on August 10th. While followers of the VIX will likely perceive volatility in the marketplace as low, we are consistently seeing opportunities in higher beta names that populate the Social Media, Commerce, Content, and related industries such as the Chip makers as well as Software and Services in and around these summer earnings releases. It appears that analyst estimates have been “off” in the space in general, as several of these stocks have popped considerably in the aftermath of releasing their earnings, even those of the Large or “Mega-Cap” nature which we find notable given the considerable analyst coverage in such names.
While not every name in our space has exhibited the relative strength that we seek, the recent earnings-led volatility has provided opportunities to re-examine certain companies and those on the cusp of inclusion, and we expect these conditions to persist throughout the next several months even after corporate earnings season is fully digested.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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