Ugly Earnings Are the Rule, Not the Exception
By Jeff Reeves
Editor, InvestorPlace.com and The Slant
The general earnings picture is pretty darn ugly. And it’s not just the Q3 slowdown with big misses from Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL), either. It’s forward-looking problems such as lower guidance at big-name stocks.
Oh yeah, and beyond balance sheet issues there’s a European slowdown, the fiscal cliff fight, emerging markets like China and Brazil cooling off and a host of other macro issues at play. All of this is sapping investor optimism as well as holding back business spending.
The bright spot (if there is one) is that the old platitude about it being a “stockpicker’s market” still holds. Generator manufacturer Generac (NYSE:GNRC) just popped almost 20% thanks to blowout results and a tie-in to Hurricane Sandy. And social media dud Facebook (NASDAQ:FB) got some swagger back on mobile ad optimism. These picks show there is indeed opportunity for a small group of stocks based on very specific drivers.
But these are the exceptions, not the rule. Simply meeting expectations is fine when the market is moving up … but if the market is soft, simply going with the flow is a decidedly unattractive trait. The best stocks are ones that prove they are different, not just companies that can step over a low bar.
My advice: Be more selective than ever, because you don’t want to be stuck with an also-ran if the market heads south. You want a stock that is better than that, and holds firm despite any short-term volatility.