Customer Service: Call 1-888-271-5237 Monday-Friday, 9 AM - 5 PM CT
Forgot Username or Password?
There's nothing like earnings season to separate the trading winners from the losers. On the losing front, we've seen stalwarts such as Apple (NASDAQ: AAPL), the widely held Facebook (NASDAQ: FB) and auto giant Ford (NYSE: F). All three of these companies posted strong earnings, but in each case, Wall Street found something to worry about regarding various aspects of their futures.
On the winning front are a plethora of companies that beat earnings and revenue expectations, and that also felt the love from traders. In particular, there are two such companies I think represent an opportunity for short-term money to ride their earnings bounces higher in the weeks to come. Let's take a look at both now.
MasterCard Inc. (NYSE: MA)
The second-biggest U.S. payments network charged up a big Q4 profit that easily bested Wall Street expectations. The company said net income, excluding litigation charges, spiked 18% to $605 million, or $4.86 a share. That compares with $514 million, or $4.03 a share, in the same quarter last year. The consensus estimate for MA's earnings per share (EPS) was just $4.80 a share. Revenue also beat estimates, coming in about 9.7% higher than a year ago at $1.9 billion versus the consensus forecast of $1.89 billion.
Shares of this blue chip spiked nearly 4% out of the gate on Thursday, although that bounce died down after the first few hours of trade. Still, I suspect that MA shares are going to see money come in, especially once the stock settles at the $515 level.
Fundamentally, MasterCard also is a bet on increased economic activity, as consumers spend more -- and charge more -- on all sorts of goods and services. The latest data om consumer spending, which accounts for about 70% of the U.S. economy, expanded at a 2.2% annual rate in the final three months of 2012. In Q3, spending rose at a 1.6% clip, so the trend is clearly on the upswing.
Recommended Trade Setup:
-- Buy MA at the market price-- Set stop-loss at $474, approximately 9% below current prices-- Set initial price target at $566.75 for a potential 9% gain in two months
Qualcomm (NASDAQ: QCOM)
This chipmaker supplies the main ingredients that make mobile computing devices work, and by mobile computing devices I'm not referring to just the iPhone or Android. Qualcomm is the firm that makes semiconductor chips for nearly every mobile device manufacturer, and that puts the company in optimal position to be the real winner in the smartphone and tablet wars.
The numbers certainly don't lie when it comes to this tech blue chip. The world's leading supplier of chips for cell phones reported huge earnings for the quarter ended Dec. 30, of $1.91 billion, or $1.09 per share, versus a profit of $1.4 billion, or $0.81 per share, a year ago. Excluding charges, the company reported earnings per share of $1.26 compared with consensus expectations of $1.13. Its top line also surged, coming in at $6.02 billion versus $4.68 billion in the year-ago quarter. The Street was only anticipating revenue of $5.9 billion.
Qualcomm also raised its profit and revenue targets for 2013, citing growing demand for smartphones and high-speed wireless services.
Qualcomm stock spiked in early Thursday trade on the news, and ended the day up about 4%. This is the kind of bounce that I think traders can ride higher, as QCOM is one of those plays in a high-demand sector that most people understand. It's also a popular tech play for fund managers, and that tailwind will likely create more demand for the shares in the weeks and months to come.
-- Buy QCOM at the market price-- Set stop-loss at $61.09, approximately 8% below current prices-- Set initial price target at $73.05 for a potential 10% gain in two months
Many investors hold strong opinions about the 200-day MA... but is it actually important?