For many companies, nothing is more important than the quarterly earnings report. Disappoint the masses, and you suffer. Impress them, and you score instant gains. Amazon (NASDAQ:AMZN) was the ultimate example of the latter this season. Months of profits were jammed into a single overnight session. So today, we’re looking at three of the top stocks to buy following great earnings of their own.
And, here’s the beauty. You don’t have to be an accountant or an expert in fundamental analysis to spot when a stock had a stellar quarter. Let the market be the judge, and simply follow the price. If the stock pops after the report, then the numbers were weighed, measured and found fantastic.
That said, I’ve scoured the market and found three candidates that look great after earnings.
Collectively, they’re all top stocks to buy moving forward. So, without further ado, let’s dive in.
3 Stocks to Buy After Great Earnings: Shopify (SHOP)
Shopify (NYSE:SHOP) deserves the first mention due to Wednesday’s massive opening gap. At its intraday peak, it was up as much as 20%. And although sellers pared the gains by day’s end, SHOP stock still ended the session up 7.7%. Overall, a better-than-expected earnings report sparked the buying bonanza.
Revenue grew to $505 million, marking a 47% year-over-year increase. The sales surge boosted adjusted earnings per share to 43 cents, easily surpassing estimates.
Numbers aside, the stock price reaction tells you all you need to know. What’s particularly impressive is that SHOP stock was already up 67% since its last earnings report in late October. So it’s not like it wasn’t already pricing in robust growth.
If profit-taking continues, we could see SHOP stock fill the gap. And with that, it’s a dip worth buying.
The Trade: Sell the March $460/$455 bull put spread for around 80 cents.
Activision Blizzard (ATVI)
Activision Blizzard (NASDAQ:ATVI) has been a steady climber ever since bottoming last year. Last week’s earnings announcement delivered its first up-gap response of the past year, suggesting the numbers were satisfying enough to justify its six-month ascent.
With ATVI stock now around its 52-week high and a consistent uptrend at its back, bullish trades continue to be tempting.
That said, implied volatility is down dramatically after earnings, so consider options premiums officially low. I prefer strategies like long calls and call spreads over naked puts and the like.
The Trade: Buy the May $62.50/$67.50 bull call spread for around $1.90.
Twitter (NASDAQ:TWTR) entered this earnings season in need of a win. October’s disappointing report demolished the stock with a nearly 21% decline in a single day. Fortunately, the market gods granted shareholders’ wishes, and TWTR jumped 15% with over 87 million shares traded.
With the uncertainty of earnings now in the rear-view mirror and momentum officially returned, it’s game on for bullish trades. This week’s pullback is providing a lower-risk entry for the patient traders who didn’t chase the earnings gap.
Despite the lower implied volatility, there’s still enough premium in put options to make selling them worthwhile if you’re looking for a higher probability play.
The Trade: Sell the March $34 put for 52 cents.
As of this writing, Tyler Craig held bullish trades in ATVI. For a free trial to the best trading community on the planet and Tyler’s current home, click here!