3 Juicy Earnings Trades of the Week

by Traders Reserve | June 27, 2012 2:00 pm

Ka-ching!

That’s the sound of another winning Stone-Cold Earnings Trade. Last week the call option for Jabil Circuits (NYSE:JBL[1]) recommended here doubled in value.

Not bad for a holding period of less than 24 hours.

And that wasn’t all for those playing the earnings trading game. Every single one of the trades I looked at last week were winners, although we did not get to trade on Oracle (NASDAQ:ORCL[2]) given that company’s early release of results.

One of the biggest winners last week was Bed Bath & Beyond (NASDAQ:BBBY[3]). I mention this name not for the fantastical gain in a put option buy, but because prior to the company releasing earnings, other pundits including the famous shill, Jim Cramer, suggested this company was poised for an earnings beat.

Obviously these folks don’t bother to do a little bit of common sense research.

It was a no-brainer that this company was looking at a miss on earnings or reduction of future guidance[4]. That fact plus a huge valuation set the table for a big earnings trade win.

I can’t wait for this quarter to end and the next earnings reporting season to begin.

There are so many tempting trades to make. It should be happy hunting for those willing to take the risk. Given the alternatives in the market, I would think that the number of investors playing the earnings trading game is growing significantly.

I would challenge you to find a better way to make money in this environment.

Here are four names to consider trading this week.

1) Paychex

The payroll and human resource servicing company reports results for the quarter ending May 31, 2012 on Wednesday after the market closes. Wall Street expects Paychex (NASDAQ:PAYX[5]) to make 34 cents per share in the period. That estimate has held steady over the last 90 days.

The company has matched or exceeded estimates in each of the last four quarters. Shares of Paychex have gained 6% in the last year of trading. Analysts expect profits to grow by 7% in the current fiscal year ending May 31, 2013. At current prices, shares trade for 19.5 times current fiscal year estimated earnings.

2) Schnitzer Steel

The steel company reports results for the quarter ending May 31, 2012 on Thursday. Wall Street is looking for a profit of 25 cents per share in the period. 90 days ago, Schnitzer Steel (NASDAQ:SCHN[6]) was expected to make 99 cents per share.

The company has exceeded expectations in three of the last four quarters. Shares of Schnitzer have fallen by more than 50% in the last year. Analysts expect profits to double from the current fiscal year ending Aug. 31, 2012 to the next. At current prices, shares trade for 18 times current fiscal year estimated earnings.

3) Family Dollar Stores

The discount retailer reports results for the quarter ending May 31, 2012 on Thursday before the market opens. Wall Street has Family Dollar (NYSE:FDO[7]) making $1.07 per share in the quarter. That’s three cents per share higher than where the number stood 90 days prior. The company has matched or exceeded estimates in three of the last four quarters. Shares of Family Dollar have gained 35% in the last twelve months of trading. Analysts expect profits to grow by 16% from the current fiscal year ending Aug. 31, 2012 to the next. At current prices shares trade for 19 times current fiscal year estimated earnings.

Source URL: https://investorplace.com/2012/06/stone-cold-earnings-trades-of-the-week-jbl-orcl-bbby-payx-gis/

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