Traders love earnings season because it reignites flagging trends or sparks new ones. And that can create some compelling and actionable trade ideas. Today we’ll look at three stocks to buy that are pushing higher on better-than-expected earnings.
They all hail from the technology sector, which has been heating up. In searching for candidates worth including in today’s gallery, I focused primarily on stocks in strong long-term uptrends that popped above clear resistance zones after earnings. Breakouts, particularly those fueled by solid earnings numbers, have staying power. Many serve as the spark that kickstart uptrends that last throughout the quarter.
Check out three of the best-looking stocks after this week’s earnings bonanza.
3 Stocks to Buy Roaring Higher After Earnings: Intel (INTC)
The Nasdaq’s resurgence has been driven in large part by strength from semiconductor stocks. While some chip stocks fared poorly after their reports (see Texas Instruments (NASDAQ:TXN)), most were flying high. Intel (NASDAQ:INTC), in particular, looks tasty moving into year-end.
Over the past six months, INTC stock has formed a textbook ascending triangle pattern reflecting an ongoing shift in the balance of power from sellers to buyers. The subtle reversal went into overdrive last week when Intel shot higher after earnings. The one-day, 8.1% rip catapulted Intel through resistance and well into April’s unfilled earnings gap.
A mild bout of profit-taking has cropped up since then, which offers a lower-risk entry to play the new uptrend. Sell the Dec $52.50 naked put for 75 cents to capitalize.
Facebook (NASDAQ:FB) earnings are fresh out of the oven, and the breakout candle is still forming, but I like its chances. The social media giant topped analyst estimates on the top and bottom line, warranting this morning’s gap of as much as 4%. The past three months have given little reason to trade the stock. It has been stuck in a sloppy trading range with heavy resistance near $192.
This morning’s gap pushed FB stock well above the ceiling, and if it holds it will position the stock for a run back toward $205. If the stock falls back below the 50-day moving average at $184, then I’m wrong. Until then, the path of least resistance looks higher. To capitalize, consider selling the Dec $180/$175 bull put spread for 70 cents.
Lam Research (LRCX)
For our final pick, we’re headed back to the semiconductor industry. Lam Research (NASDAQ:LRCX) is one of the best-performing stocks in the space this year and just blasted to the moon after excellent earnings numbers. The three-day pole-vault saw huge volume suggesting institutions were big buyers.
Its 20-day, 50-day and 200-day moving averages are all rising in bullish fashion beneath the uptrend and confirms that buyers control all time frames.
Today’s 3.5% pullback is more than justified after such a large run and is creating a compelling buy-the-dip opportunity. If you’re looking for a high-probability play, sell the Dec $235/$230 bull put spread for around 60 cents.
As of this writing Tyler Craig held bullish options positions in INTC, FB, and LRCX. For a free trial to the best trading community on the planet and Tyler’s current home, click here!