It’s that time again where public companies are required by law to report their performance over the course of the last few months.
But why should you care?
Not only does this period offer an insight for the future of your investments, but it gives you the opportunity to experience IMMEDIATE results from the market.
Sure, nothing spells profits quite like earnings season, but it’s balanced by plenty of losses as well.
That’s why I’ve listed some helpful tips for what to look for when you’re on the hunt to score the most cash from your investments.
First and foremost, it’s important to understand that you DO NOT have to be an expert at chart analysis to make an educated guess as to what particular direction a stock will move in.
I know the big-wigs on Wall Street like to use fancy words and overly complicated graphs to get their point across, but in reality, predicting the trajectory of stocks is quite simple.
In fact, in some instances, you can get away without even looking at the chart at all!
All the information you need is available within the performance reports that companies are obligated to release to the public. Even so, there’s no need to get bogged down with those either.
At the end of the day, the decision to buy or sell a specific stock comes down to how much revenue the company generated during the previous quarter.
And that’s EXACTLY what these performance reports tell us!
When it comes to earnings season, your first move should be to determine what companies are scheduled to announce their performance.
As I mentioned before, it’s absolutely necessary for publicly traded companies to report their earnings so this information should be fairly easy to find. Websites, such as zacks.com, or even a simple google search offer convenient ways to gather this information for free.
There’s really no excuse for not using this data to your advantage.
Once you’ve selected a company that’s on track to reporting earnings, then it’s time to get to work.
The key here is to wait until AFTER earnings are released. Based on whether the company met or beat their estimated performance, is how you should execute your trade.
It’s easy!Generally speaking, if a company fails to meet or exceed their expected earnings, then it’s a good indication that share prices will consequently fall and you should NOT buy in.
However, if they do the opposite, it’s usually a green light for adding the company’s stock to your portfolio.
Take a look at the chart for SodaStream (SODA) below:
If you look to the upper right you’ll notice that the current stock price (highlighted in yellow) is noticeably higher than the day before.
Any guesses for why SODA shares jumped up?
That’s right! As I write this, SodaStream just recently reported earnings and has succeeded in beating estimates, driving its stock up from $85.77 to somewhere around $108.
That’s more than a 25% gain in less than 24-hours!
A public company that’s capable of outperforming their estimated earnings signals to investors that there’s a profitable future ahead. It’s basically a way to identify the strength of a company.
Think of it this way… Would you rather put money on the horse that’s in tip-top shape to win a race or bet on the worn down one that’s experiencing health issues?
It’s a no brainer! If you wanted to make any money, then of course you’d go for the healthier horse since it has a better chance of winning the race.
The thing is, when it comes to companies reporting their earnings, there’s not much of a difference.
Earnings season tends to come and go, so take advantage of this period while you still can. Keep an eye out for companies that have managed to perform well and skew your investments accordingly in order to earn the most amount of profits possible.
It’s up to you to incorporate these tactics at your own risk, but if you prefer to leave it to someone else, we offer plenty of services here at WSI TV that do the work for you.
