Investing in companies that are good at beating earnings has been a popular strategy for decades. Some companies beat earnings once or occasionally, but others manage to deliver good news to their investors consistently. Investing in good companies should be straightforward enough, but is it better to invest in those that keep having good news or those that keep disappointing?
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Investors, traders and speculators need to know that simply chasing earnings winners and stocks that rise on good news can be a dangerous game. Sometimes the gains were larger than they should have been, and sometimes the underlying stocks just do not keep moving despite the good news.
24/7 Wall St. has tracked 10 earnings reports from the last week of July in which the earnings news was very positive and the stock price surged alongside the report. Some of these might not have closed at their highest levels, and some may not be anywhere close to their all-time highs. Yet, all in all, these are the companies that investors are going to consider, at least for the time being, as serious “earnings season winners.”
Amazon
While Amazon.com Inc.’s (NASDAQ: AMZN) 4% gain may not sound like much, the stock has been on a tear all year. It is winning from the cloud and from the retail apocalypse having just been vaulted forward by 10 years due to the COVID-19 shutdowns and limited reopenings.
Amazon even blew earnings away after spending that $4 billion that it committed to spend for safety and growth and after 175,000 or so in new hires. Amazon stock closed Friday up 3.7% to $3,164.68, with a consensus price target of $3,117.20. It trades in a 52-week range of $1,626.03 to $3,344.29. Goldman Sachs was the biggest bull for Amazon after the report, with a Conviction-Buy rating and a $4,200 price target.
AMD
Advanced Micro Devices Inc. (NASDAQ: AMD) is winning at Intel’s expense. The stock was running ahead of earnings after Intel’s 7nm woes, and the gains just continued onward and upward. Guidance in the report suggests this as well. AMD shares even hit a new high of almost $79 on Friday before some late-day profit-taking that was frankly overdue. AMD was just trading at $59.57 ahead of Intel’s confessional earnings report showed big 7nm delays, and analysts are chasing it up even more. AMD stock closed Friday at $77.43, in a 52-week range of $27.43 to $78.96. The consensus price target is $72.29.
Apple
Another winner is Apple Inc. (NASDAQ: AAPL). Its shares were up 10% at $425 to close out the day, hitting a new all-time high in the process. Interestingly enough, its unexpected stock split was just icing on the cake. Apple shares had been at $384.76 ahead of the earnings report, and that was already up 31% year to date, without the post-earnings gain. Apple stock has a 52-week trading range of $192.58 to $425.66. Analysts across the board hiked their targets in reaction to the report, and the street-high target of $500 a share came from Cascend Securities.
At Home
Small-cap home furnishings purveyor At Home Group Inc. (NYSE: HOME) is winning from the invest-in-home economic theme. Its stores are massive, with lots of space so you won’t have to worry about breaching your social distancing space. Its stock has been running ahead of earnings and saw some profit-taking after the last pop.
However, At Home scored two big price target hikes from analysts, and its stock was only about one-fourth of its value from mid-2018 before the news. BofA Securities upgraded it to a Buy rating with a $16.50 price objective, and Jefferies reiterated a Hold rating with an $11 price target. At Home stock closed Friday at $12.42. The 52-week range is $1.20 to $13.54, and the consensus analyst target is $9.80.
24/7 Wall St.Labeled toxic by more parties than can easily be counted, Facebook Inc. (NASDAQ: FB) even has seen an advertising boycott by some larger companies and social justice groups. Its shares were up over 8%, as it is still the top social media destination and keeps growing cash whether or not its employees are all working remotely. Facebook hit a new high after its report, and analysts raised their targets galore. Rosenblatt Securities took on the role as the biggest Facebook bull with a Buy rating and a $325 price target.
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PayPal
All said and done, PayPal Holdings Inc. (NASDAQ: PYPL) stock rose about 10%, after earnings, surging to all-time highs. As COVID-19 has forced more commerce to the web, online payment services have seen a big boost. Undoubtedly, this is what accounts for PayPal’s record quarter. Analysts are chasing it up with even higher target prices. Deutsche Bank was the biggest PayPal bull, with a Buy rating and a $234 price target. PayPal stock closed Friday at $196.07, in a 52-week range of $82.07 to $198.66. The consensus price target is $208.64.
Social media and discovery tool Pinterest Inc. (NYSE: PINS) is supposed to have the least amount of offense, the least amount of controversy, hate speech and the other negatives that social media platforms have been dealing with (or fostering). Its shares were up about 36% at $34.29 on Friday, which is still shy of its $36.83 high over the past year. Pinterest is helping buyers and sellers alike, and with everyone at home, the global monthly active users surged by 39% in the most recent quarter alone. Pinterest stock trades within a 52-week range of $10.10 to $36.83. The consensus price target is $24.27.
Shopify
Before earnings, Shopify Inc. (NYSE: SHOP) traded at $985, but it had been in the low $900s per share before bouncing and before Goldman Sachs issued an admittedly late upgrade. Other analysts piled in here with much higher target prices. Even though Shopify only moved up so much as a result of earnings, keep in mind that the stock has gained about 164% year to date. Out of the analysts, Rosenblatt Securities hit the highest price target at $1,400. Shopify stock closed Friday at $1,024.00, in a 52-week range of $282.08 to $1,107.92. The consensus price target is $1,057.05.
Qualcomm
Not only did Qualcomm Inc. (NASDAQ: QCOM) beat earnings, but it also announced a pact with Huawei that will bolster its business even further. It also keeps getting referred to as the 5G winner with the best smartphone chips bar none, and analysts raised price targets handily. Canaccord Genuity was the biggest bull, with a $137 price target. Qualcomm stock closed Friday at $105.61, in a 52-week range of $58.00 to $107.75. The consensus price target is $109.33.
UPS
United Parcel Service Inc. (NYSE: UPS) did not get the coverage or credit it deserves, and its shares surged to 52-week highs, as the company is shipping and delivering around the clock. As much as Amazon is capitalizing on its online marketplace, UPS is capitalizing on its delivery network. With more people stuck at home, demand will only go up for delivery services. Raymond James reiterated a Strong Buy rating with a $165 street-high price target. UPS stock was last seen at $142.76, in a 52-week range of $82.00 to $145.50. The consensus price target is $115.39.
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