In a quarter when more than half of the companies reporting earnings are coming in below the target, Top Equity has highlighted two stocks that smoked Wall Street’s forecasts. Unfortunately, both trickled down post-announcement.
While the initial street response is disappointing, history bodes well for both UnitedHealth Group Incorporated (UNH) and Material Sciences Corporation (MASC). Studies on the subject describe a phenomenon called post-earnings-drift. In English, it means stocks that top estimates tend to outperform the market. If bulls can hold up, then both stocks should fare well in the next 30-to-60-to-90 days.
On to next week; SanDisk Corporation (SNDK) will report earnings after the market closes on Wednesday, January 25th.
The memory chip maker is expected to earn $1.25 for its 4th quarter. Top Equity News expects SNDK to announce earnings that will exceed investors’ and analysts’ expectations. The TEN estimate is $1.29 cents – or a 4 cent upside surprise.
Top Equity is not alone. On Tuesday, Flyonthewall reported RBC Capital told clients that “SanDisk should report stronger than expected Q4 results.”
If both of us are correct, the stock should – should – do well. The last three quarterly reports investors were rewarded with an 8% return in the days around the announcement. SanDisk has surpassed Wall Street’s opinion 10 consecutive quarters. Six of those instances the stock pushed higher. TEN is looking for a lucky 7.
SNDK is trading near a 52-week-high. Volume is rising, and its short-term moving-averages are accelerating away from the 50-day-average. A little bit lower on the chart, TEN sees SanDisk’s MACD line turning skywards and pushing aggressively past the zero buy/sell line.
If the earnings news is strong enough to propel SNDK’s shares over a multiple top at $54, it could race to the next level of resistance from $59 to $60.
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