Profit From More Earnings Predictions!
BE THE LEADER OF THE PACK!
by Ian Harvey
October 30, 2017
Earnings predictions for the week beginning October 30, 2017
-- more profit to be made from a deluge of companies reporting during the earnings season! --
Equities have reached record highs recently in part because of improving economic data. Consumer sentiment hit 100.7 in October, just below the expected 100.8.
The S&P 500 and Nasdaq both touched fresh record highs, as earnings rallied from tech stocks like Alphabet (GOOGL), Amazon (AMZN), Microsoft (MSFT), and Intel (INTC).
The week ahead will provide plenty of volatility for the market due to…….
The Nasdaq had its biggest one-day point gain since August 2015, and rounded out the week with a fifth consecutive weekly win. Earnings and a stronger-than-expected reading on third-quarter gross domestic product (GDP) also helped lift the Dow Jones Industrial Average (DJIA), which, like the SPX, managed its seventh straight weekly win, marking the Dow's longest win streak of the year.
The S&P 500 Index (SPX) rose to 2,581.07, up 0.2 percent for the week. The Nasdaq Composite (IXIC) was up 1.1 percent for the week to 6,701.26. The Dow Jones Industrial Average (DJIA) was up 0.5 percent for the week to end at 23,434.19.
The CBOE Volatility Index (VIX) at 9.80 lost 1.7% on the week.Earnings Ahead
Tech-sector favorites Apple (AAPL), Tesla (TSLA), Facebook (FB) and Alibaba (BABA) will report earnings in the week ahead.
Electronic Arts (EA) is set to report fiscal Q2 results after the close Tuesday, and Activision Blizzard (ATVI) will follow with third-quarter results after the close Thursday. Both companies are riding high on the shift to digital game downloads and micro-transactions.
Many high-profile chip industry players are set to report quarterly results in the week ahead - chip-gear maker Advanced Energy Industries (AEIS), semiconductor-equipment maker Nova Measuring Instruments (NVMI), chipmakers Cavium (CAVM), Qorvo (QRVO) and Qualcomm (QCOM); and audio-chip maker Cirrus Logic (CRUS).
Cybersecurity companies are also in the spotlight -- Check Point Software Technology (CHKP), Qualys (QLYS), FireEye (FEYE) and CyberArk (CYBR).
The payment processor MasterCard (MA) reports Q3 earnings on Tuesday.
In total, there will 897 companies on deck to release results this week, including 134 S&P 500 members – as mentioned above, some of the companies that will be reporting.
By the end of this week, there will have been Q3 results from more than 80% of S&P 500 members.
The Q3 earnings season has been quite positive…..
A Look Back At Earnings Predictions for Week Beginning October 23, 2017
Earnings Results for the Week Beginning October 23, 2017
|October 24, 2017||MCD DEC 15 2017 165.000 PUT||P.P: 35%|
|October 24, 2017||CAT JAN 19 2018 135.000 CALL||P.P: 155%|
|October 25, 2017||BA NOV 17 2017 255.000 PUT||P.P: 52%|
|October 26, 2017||AMZN NOV 17 2017 950.000 PUT||P.P: 45%|
|October 26, 2017||GOOGL NOV 17 2017 1020.000 CALL||P.P: 137%|
|October 27, 2017||XOM NOV 17 2017 82.500 PUT||P.P: 53%|
NOTE: P.P: – Potential Profit
Options Trades to Consider Based on Expected Earnings Reports:
Monday, October 30
Mondelez International Inc. (NASDAQ:MDLZ) – will report third-quarter earnings after the market closes. For the third quarter, Mondelez's Consensus Estimate for earnings is pegged at 54 cents, reflecting a 3.4% year-over-year increase. Meanwhile, the Consensus Estimate for total revenues is pegged at $6.5 billion, implying 1.2% growth.
Mondelez has been
facing challenges to boost its volume since 2014, primarily due to soft
consumer demand. In fact, the food industry has been giving a dismal
performance for quite some time to boost sales. Mondelez, in particular,
witnessed a decline in revenues for the last nine quarters, primarily due to
The stock is down 7% year to date,
following a trend of weak sales performance. As well, Mondelez's sales were
down 2.8% on a 2.1% decline in volumes in the first half of 2017. Organically,
sales decreased 1% in the period.
The maker of Oreos and Ritz crackers has
struggled to find growth in North America as consumers in developed markets are
buying fewer of the types of snacks it sells. Organic sales in North America
declined 5% year over year in the first half of 2017. Sales growth worsened in
the second quarter, falling 2.7%, after a malware incident wreaked havoc on the
company's ability to invoice customers for orders.
Another concern ahead of Mondelez's report
because is that Wall Street seems to have turned negative on the consumer
packaged goods group. Looking at Hershey’s report last week; the report
appeared to be sound, but the stock was hit hard. And it doesn’t seem to matter
whether Mondelez delivers a good number or not as the group seems to be in the
doldrums according to investors.
Option trade to consider: Buy the MDLZ NOV 17 2017 40.000 PUT at approximately $0.70.
Tuesday, October 31
Mastercard Inc (NYSE:MA) - the payment processor reports Q3 earnings before the market opens. Wall Street expects a 14% gain in EPS to $1.23 on revenue of $3.287 billion, also up 14%; but the Earnings Whisper number is $1.26 per share. Mastercard (MA) in September raised its full-year sales outlook.
Investor sentiment going into the company's earnings release has 80% expecting an earnings beat. Since the company's last earnings release while the stock has drifted higher by 12.5% from its open following the earnings release to be 21.0% above its 200 day moving average of $122.79. Overall earnings estimates have been revised higher since the company's last earnings release.
Option trade to consider: Buy the MA DEC 15 2017 150.000 CALL at approximately $3.20.
Mosaic Co (NYSE:MOS) - read article and recommended options trade -- “Option Trade – Mosaic Co (NYSE:MOS) Puts - Friday, October 27, 2017.”
Mosaic Co, a producer and marketer of concentrated phosphate and potash crop nutrients, will release its 3Q17 quarter earnings before the market opens. The company is expected to report EPS (earnings per share) of $0.18, which would be a ~45% YoY (year-over-year) fall.
For 3Q17, Wall Street analysts are estimating a combined YoY sales fall of 2% for Mosaic—to $1.92 billion from $1.95 billion in 3Q16.
The company witnessed good demand and strong operational performance prior to the hurricane with profitability metrics tracking ahead of the third quarter guidance. Post the mayhem of Irma, Mosaic now expects roughly 250,000 to 350,000 tons of lower production in September. In addition to this, the damage to Mosaic's Bartow warehouse is anticipated to result in a loss of up to 400,000 tons of finished phosphate product.
Over the past year period, Mosaic has significantly underperformed the benchmark indexes, the S&P 500 (SPY) and the VanEck Vectors Agribusiness ETF (MOO). During this period, Mosaic has fallen 11.4% whilst the S&P 500 has returned 19.4%, and the Agribusiness ETF MOO has returned about 20.5%.
Among peer fertilizer stocks, Mosaic has been one of the worst performers so far this year, with a 26.6% loss YTD (year-to-date)
And, over the past three months, Mosaic's shares have lost 6.1%, underperforming the industry’s 21.8% gain.
Option trade to consider: Buy the MOS NOV 17 2017 21.000 PUT at approximately 0$.60.
Wednesday, November 01
Tesla Inc. (NASDAQ:TSLA) -- will report earnings after the market closes. The consensus estimate is for a loss of $2.27 per share on revenue of $2.92 billion and the Earnings Whisper number is ($2.54) per share. Investor sentiment going into the company's earnings release has 21% expecting an earnings beat.
Historically, Tesla tends to see a rally ahead of its earnings calls, but TSLA stock is headed the other direction now as downgrades are taking their toll on the stock price.
TSLA shares have lagged the market and tech stocks meaning that the "smart money" is starting to migrate away from the stock.
Tesla stock is now stuck in a volatility sell-off that is targeting a move below $320. A break below $320 will move TSLA stock below its 10-month and 200-day moving average. This will be a key technical mark against the stock causing even more selling pressure.
Option trade to consider: Buy the TSLA DEC 15 2017 300.000 PUT at approximately $10.80.
Facebook Inc. (NASDAQ:FB) – will report earnings after the market closes. The consensus earnings estimate is $1.28 per share on revenue of $9.88 billion but the Earnings Whisper number is $1.40 per share. Investor sentiment going into the company's earnings release has 79% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 30.61% with revenue increasing by 40.92%.
Short interest has decreased by 6.0% since the company's last earnings release while the stock has drifted higher by 1.8% from its open following the earnings release to be 16.6% above its 200 day moving average of $152.51.
Overall earnings estimates have been revised higher since the company's last earnings release.
Shares of Facebook have climbed higher ahead of its Wednesday earnings report; and with Alphabet and Amazon, producing really fantastic earnings report it's tough to resist the stock of the social media giant.
Option trade to consider: Buy the FB NOV 17 2017 180.000 CALL at approximately $4.00.
Thursday, November 02
Apple Inc. (NASDAQ:AAPL) – will report Q3 results after the market closes. The consensus earnings estimate is $1.86 per share on revenue of $51.17 billion, up from $1.66 per share on $46.56 billion in the year-earlier period -- but the Earnings Whisper number is $1.93 per share. The company has handily beaten estimates in each of the last three quarters.
Consensus estimates are for year-over-year earnings growth of 11.38% with revenue increasing by 9.22%.
Short interest has decreased by 12.5% since the company's last earnings release while the stock has drifted higher by 2.4% from its open following the earnings release to be 11.3% above its 200 day moving average of $146.52.
Overall earnings estimates have been revised higher since the company's last earnings release.
The stock is now up +40.1% in the year-to-date period.
Apple will begin selling its highly anticipated iPhone X smartphone Friday after a week of preorders.
Option trade to consider: Buy the AAPL DEC 15 2017 175.000 CALL at approximately $1.70.
Activision Blizzard, Inc. (NASDAQ:ATVI) - will follow with third-quarter results after the market closes. Activision is seen earning 49 cents a share, down 6%, on sales of $1.73 billion, up 6%.
Activision is riding high on the shift to digital game downloads and micro-transactions; and is well positioned to benefit from the explosion in eSports.
The company has passed management's financial targets in each of the past five quarters. And considering the run-up in the stock so far this year, Wall Street is betting Activision will add to that impressive streak.
Option trade to consider: Buy the ATVI NOV 17 2017 65.000 CALL at approximately $1.80.
Friday, November 03
CBRE Group Inc. (NYSE:CBG)
- Commercial real estate services company will report
before the market opens and a
strong quarter is expected.
growth fell last quarter from 5% to 4%, earnings-per-share grew 25%, up from
19% in the prior report.
estimates call for earnings-per-share growth of 8% for the quarter, and 12%
growth for the full year.
CBRE has a 92
Composite Rating and holds the No. 2 rank among its peers in the Real
Estate-Development/Operations industry group.
Corp boosted its position in shares of CBRE by 7.4% during the 2nd quarter. The
fund owned 38,846 shares of the financial services provider’s stock after
purchasing an additional 2,692 shares during the quarter. Stifel Financial
Corp’s holdings in CBRE Group were worth $1,415,000 at the end of the most
recent reporting period.
Option trade to consider: Buy the CBRE DEC 15 2017 40.000 CALL at approximately $0.85.
An interesting situation has developed in Gluskin Sheff's chief economist and strategist, David Rosenberg, who may be one of Wall Street's biggest bears, seeing a positive market – not necessarily in the U.S. where he says “that fresh stock market records were creating a false sense of security” – even though stocks seem to be firmly holding onto their win streak; where the major indexes are at fresh record highs – BUT, Japan, where “the Nikkei is breaking out.”
He said, "I think even a child could see that the 30-year secular downtrend has been broken over the course of the past couple of months."
According to Rosenberg, Japan has one of the few markets that isn't trading expensively to its historical price earnings ratio — noting "almost everybody else in the world is."
"What's interesting in Japan is that the small cap stocks are starting to outperform large cap stocks. So, what that's telling me is that this is more than just buy Japan because of the weak yen. This is actually a much more fundamental story that people are missing," Rosenberg said.
"Japan is probably the most under-owned stock market on the planet from a global portfolio manager perspective," the economist added.
This brings forth the indication that an addition of Japanese owned companies, registered on the U.S. stock market, could be an interesting play!
It is worth mentioning that “complacency” in an ever-increasing stock market, should be controlled as there are still plenty of potentially detrimental geopolitical and economic factors; therefore, it is important to refrain from getting too comfortable and complacent; the key-word now is “vigilance” – even though there seems to be little in the way of catalysts to de-rail the rally.
Bear-in-mind, that the markets could react in the short term to any further signs of escalation or de-escalation of the geopolitical risk, as well as the impact of the natural causes, which will help plan for a successful and profitable week ahead.
Therefore, with the market uptrend still continuing, investors should exercise extra caution. But by learning to use call and put options, investors can significantly reduce risk and capitalize on basing stocks that are making breakaway gains caused by earnings reports.
Now that the earnings season is in full-swing, members of Stock Options Made Easy are receiving recommendations from our private option trading portfolios. There are two memberships available, “Cut-to-the-Chase” and “Armchair Trader” Membership Series, which provides you with the very best of recommendations.
As to the “trades to consider” mentioned in this article, you will notice that most options trades 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, and also when to exit – prior to, or after the earnings announcements.
It is Important to Note: That 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.
If you wish to receive more options trading recommendations similar to this, which will help boost your portfolio strategy, get on board with the members of Stock Options Made Easy.
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