Knowing which stocks to buy in front of earnings can be dicey business. In the coming week, three market leaders are showing the right kind of stuff on the price chart to afford technical-based “buy” ratings in front of the news.
Any investor with even a passing interest in the market knows earnings can be a powerful catalyst on a stock’s share price. Growth play and over-the-top streaming hardware top dog Roku (NASDAQ:ROKU) jumped nearly 21% following July’s report. What’s more, in the two periods prior ROKU stock soared 28% and 25%, respectively. But stocks to buy for an earnings release are rarely that consistently generous.
Market sentiment, quarterly results — both on an absolute basis as well as compared to consensus and whisper views — and guidance from the company all play key factors in how investors react to earnings. And which of those influences holds the most weight with any given report can be elusive until after the fact. Still, it’s not time to simply put the cash under the mattress when it comes to stocks to buy in front of earnings.
With caveats in place, when a company is a market or industry leader, has proven earnings power and has constructively put in the time on the price chart, earnings can act as a positive catalyst. And right now three stocks of this caliber are in our sights for this type of investment opportunity.
Stocks to Buy: Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is the first of our stocks to buy in front of earnings. The tech giant has been firing on all cylinders the last couple years and there’s little reason to think this bullish trend won’t continue. MSFT earnings are slated for next Thursday evening.
Since reporting last quarter, shares of Microsoft are up about 4.5%. That leadership from the world’s largest company compares favorably to the broad-based S&P 500’s flat performance over the last three months. But the story for MSFT stock gets even better on the price chart.
Over the last six months shares of Microsoft have established a solid base-on-base pattern. There was an ill-timed breakout attempt from the pattern in September as the market began to aggressively selloff. Now after pulling modestly back within the base to form a confirmed weekly doji low with a supportive-looking bullish stochastics setup, MSFT is a stock to buy today.
AT&T (NYSE:T) is the next stock to buy. For many investors T is a widows-and-orphans stock with its defensive business and hefty yield of around 5.5%. But today’s AT&T is much more.
T stock has aggressively reshaped its business to grow and compete in today’s market against competition from Disney (NYSE:DIS), Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN). And it’s my guess T earnings are going to make good on recent relative strength. Plus it has a flat base or high handle formation which has followed a massive corrective cup-shaped base.
Buying T stock in front of earnings is simple. I’d recommend waiting for shares to trade above nearby pattern resistance of $38.22. With the company set to report on Oct. 28, my guess is the early bird will get the worm. The earnings reaction should fuel additional gains from this key breakout.
EBay (NASDAQ:EBAY) is the last of the stocks to buy in front earnings. The formidable online auction and commerce platform reports next Thursday night and there’s reason to believe shares are on sale ahead of the EBAY earnings release.
EBAY stock has formed a large corrective cup that’s nearly two years in the making. The healthy base is complimented by a handle pattern in the right side of the base that’s put together a pivot low, confirming an uptrend above the 50% retracement level. It’s a powerful combination. Coupled with a hammer candlestick and oversold stochastics on the verge of a bullish crossover, EBAY stock is ripe for buying in today’s auction.
Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.