A Tidal Wave Of Earnings To Profit From!
by Ian Harvey
August 06, 2017
Continue to profit from a tidal wave of earnings in the week ahead!
There will be a tidal wave of earnings in the week ahead that will provide plenty of profits for the astute options trader; particularly with volatility picking up as the earnings season winds down.
Looking at the overall results for the major indexes past week:
There are only about 16% of the S&P 500 companies still to report this earnings season, with 35 index members reporting in the week ahead; with the bulk of results coming from the retail and media sectors; with reports from Disney and News Corp report, and retailers Macy's, Nordstrom, Kohl's and JCPenney.
Earnings season has helped send stocks
to new highs this summer; earnings growth up about 12 percent.
Fed speakers and economic data -- producer
and consumer inflation will be reported at the end of the week, but it is the
consumer price index Friday that markets will be most focused on after the July
jobs report showed another month of soft wage growth and other inflation measures
continued to look weak – will be the main focus in this area.
The tech sector has been lagging the other indices; probably due to profit-taking, given the fact that stocks have done so well, producing very strong topline growth.
There have been plenty of positives so far
from the early start of the earnings season, and members of Stock Options Made
Easy have been benefiting from this situation; here are some of these positive
A Look Back At Last Week’s Earnings Predictions
Earnings Results for the Week BEGINNING JULY 31, 2017
|01 August 2017||APPL Aug 18 2017 150.00 Call||P.P: 193%|
|02 August 2017||TSLA Aug 18 2017 315.00 Put||P.P: 127%|
|02 August 2017||SQ Sep 15 2017 27.00 Call||P.P: 34%|
|02 August 2017||TTWO Aug 18 2017 85.00 Call||P.P: 307%|
|03 August 2017||GRUB Aug 18 2017 47.50 Call||P.P: 151%|
|03 August 2017||ATVI AUG 18 2017 65.000 CALL||P.P: 227%|
|04 August 2017||SRE Aug 18 2017 115.00 Call||P.P: 253%|
NOTE: P.P: – Potential Profit
Options Trades to Consider Based on Expected Earnings Reports:
Monday, August 07
Avis Budget Group Inc. (NASDAQ:CAR) -- Avis Budget continues to face hurdles like high fleet costs and unfavorable currency headwinds. Also, a major portion of Avis Budget's domestic car rental reservations come through third-party distribution channels.
Analysts' forecasts EPS for the quarter to be $0.42. The reported EPS for the same quarter last year was $0.63.
Option trade to consider: Buy the CAR Sep 15 2017 31.00 Put at approximately $1.90.
Twilio Inc (NYSE:TWLO) - read article and recommended options trade -- “Cut-to-the-Chase” Recommendations - Week Beginning - Monday, July 31, 2017”
Option trade to consider: Buy the TWLO AUG 18 2017 30.00 CALL at approximately $1.00.
Tuesday, August 08
Michael Kors Holdings Ltd (NYSE:KORS) -- Wall Street expects the company’s earnings to fall 29.5% YoY (year-over-year) to 62 cents per share. Total sales are likely to contract 7% YoY to $991 million, which would be the fourth consecutive quarterly decline in KORS’ top line.
The handbag business continues to face challenges as millennials buy expensive 'athleisure' apparel from Lululemon Athletica inc. (NASDAQ: LULU ) instead of pricey purses from Michael Kors or Coach Inc (NYSE: COH ), and KORS itself seemed to admit as such when it agreed to buy Jimmy Choo last month. That $1.25 billion deal was intended to diversify KORS away from handbags, indicating a lack of confidence in its legacy business.
Even if the company manages an earnings beat, it still implies declining profits, and the Jimmy Choo deal adds risk to the balance sheet.
Option trade to consider: Buy the KORS SEPT 15 2017 37.500 PUT at approximately $2.20.
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) -- Wall Street analysts expect $0.96 EPS, down $0.44 or 31.43 % from last year’s $1.4 same quarter earnings. This translates into $333.61 million profit for VRX giving the stock a 4.29 P/E.
More hurdles are anticipated throughout the rest of 2017, guidance could come back down again, even after last quarter’s pleasant surprise of revenue and adjusted EBITDA outclass for 2017.
Option trade to consider: Buy the VRX SEPT 15 2017 15.000 PUT at approximately $1.15.
CVS Health Corp (NYSE:CVS) - read article and recommended options trade – “Option Trade – CVS Health Corp (NYSE:CVS) Calls - Wednesday, August 02, 2017”
Option trade to consider: Buy the CVS SEPT 15 2017 80.000 CALL at approximately $1.85.
Wednesday, August 09
Mylan N.V. (NASDAQ:MYL) -- Analysts' forecast EPS for the quarter at $1.19. The reported EPS for the same quarter last year was $1.16.
Mylan's Specialty segment, of which EpiPen is the most significant product, continues to be weak. In Dec 2016, Mylan announced the launch of the authorized generic for EpiPen Auto-Injector at a wholesale acquisition cost of $300 per epinephrine injection USP two-pack, which is more than 50% lower than the WAC of EpiPen 2-Pak Auto-Injectors. Sales of EpiPen Auto-Injector are anticipated to continue to decline in the current quarter as a result of increased competition and the impact of the authorized generic launch.
Meanwhile, the company's efforts to get Advair's generic approved suffered a blow when the FDA issued a complete response letter to its ANDA for generic Advair Diskus.
Option trade to consider: Buy the MYL SEPT 15 2017 32.5000 Put at approximately $1.50.
Weibo Corp (ADR) (NASDAQ:WB) - Wall Street analysts expect $0.31 earnings per share, up $0.19 or 158.33 % from last year’s $0.12 same quarter earnings. This translates into $67.76M profit for WB giving the stock a 63.35 P/E.
Numbers are strong and WB stock should easily bust through the high of $82 in the near term and keep that pace going for some time to come.
Option trade to consider: Buy the WB Sept 15 2017 80.000 Call at approximately $4.80.
Thursday, August 10
Snap Inc. (NYSE:SNAP) -- read article and recommended options trade -- “Cut-to-the-Chase” Recommendations - Week Beginning - Monday, July 31, 2017”
Option trade to consider: Buy the SNAP SEPT 15 2017 14.00 CALL at approximately $0.80.
Nordstrom, Inc. (NYSE:JWN) -- Brokerages predict earnings of $0.61 per share for the current fiscal quarter. Nordstrom reported earnings of $0.67 per share during the same quarter last year, which would indicate a negative year over year growth rate of 9%.
On average, analysts expect that Nordstrom will report full-year earnings of $2.96 per share for the current year, with EPS estimates ranging from $2.84 to $3.02.
Nordstrom's solid past performance reflects the company's robust brand image, cost-savings initiatives and impressive omnichannel efforts. The company is undertaking several initiatives to keep pace with customers' shift to online shopping. Evidently, Nordstrom has been focused on technological advancement, through development of e-commerce and digital networks, and improvement of supply-chain channels and marketing efforts.
Option trade to consider: Buy the JWN AUG 18 2017 47.500 CALL at approximately $1.50.
Friday, August 11
Magna International Inc. (USA) (NYSE:MGA) -- Wall Street analysts expect $1.46 EPS, up $0.05 or 3.55 % from last year’s $1.41 same quarter earnings. This translates into $544.44M profit for MGA giving the stock a 7.98 P/E.
Overall, the company will continue to perform well, despite the potential for either a border tax or significant NAFTA shake-up on the horizon — both of which seem unlikely.
Magna operates in a growing segment of the economy with significant advantages over its peers. The company has set up operations in dozens of countries, conveniently (if not strategically) located near every major automotive manufacturer in the world.
Option trade to consider: Buy the MGA SEPT 15 2017 47.500 Call at approximately $1.50.
You will notice that most options trades to consider have short-term expiry dates, as the expected movement of the option’s price should occur just prior to, or shortly after, report of earnings. It is entirely up to the individual trader as to whether they add a stop-loss or not.
Also Note: These suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
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