I’m always on the lookout for stocks to buy after earnings. And nothing beckons like a company’s share price gapping higher as investors cheer the numbers.
Unfortunately, positive responses have been a rarity during this earnings season. The twin troubles of high inflation and a hawkish Fed have thrown a wet blanket on asset prices. And it’s overshadowing most of the reports getting released.
That said, there have been a few bright spots. Given the sea of red greeting stock watchers each session, they’ve been easy to find. Sort your watchlist by percentage change, and the big winners will rise to the top. I noticed three standouts that both delivered great numbers and saw their share prices respond positively.
If you’re willing to ignore the messy indexes, these are three of the best stocks to buy.
Stocks to Buy: Apple (AAPL)
The market was desperate for its leader to wow the crowd and bring buyers back in. Fortunately, Apple did just that by reporting its largest quarter of revenue ever. For the previous three months, the maker of all i-things saw its sales grow 11% year-over-year to $123.9 billion. That was good enough to boost earnings per share by 25% to $2.10.
The only product category that didn’t top analyst estimates was iPads. Buyers swarmed following the release, sending shares higher after hours Thursday. Importantly, AAPL stock has held onto the overnight gains in Friday’s session. The stock is testing its 50-day and 20-day moving averages and overhead resistance near $170. To fully turn the trend and give the green light to buyers, AAPL needs to break through them all.
Use that as the trigger for today’s idea.
The Trade: Buy the March $170/$180 bull call spread for around $4.
You’re risking $4 to make $6 if the stock tops $180 by expiration.
Microsoft (MSFT)
As the second-largest company in the S&P 500 and one whose share price entered the earnings report 17.5% off the highs, Microsoft also needed to deliver. And it did. The software giant raked in $2.48 per share on $51.73 billion in revenue, topping analyst forecasts. As a result, MSFT stock leaped higher after hours, but the up gap on Wednesday was aggressively sold into.
Fortunately, shares have stabilized, and we’re now forming a sideways base. Much work remains, though. The falling 20-day moving average needs to be breached to signal a more significant turnaround is afoot. I suggest using that as the trigger for today’s trade idea.
You could go with another bull call like AAPL, but I’m going to mix it up to provide a higher probability alternative.
The Trade: Sell the March $275/$270 bull put spread for 90 cents.
Consider it a bet that MSFT stock stays above $275 for the next six weeks. If it does, you’ll capture the max gain of 90 cents. Conversely, the max loss is $4.10.
Stocks to Buy: Visa (V)
The final idea for today’s stocks to buy is Visa. Shares of the financial company are surging after reporting rosy numbers. Its quarterly revenue surpassed $7 billion for the first time, helping Visa capture $1.83 per share. Both metrics topped analyst estimates. With V stock submerged beneath all moving averages, it entered Thursday’s event in desperate need of a boost.
Now, with Friday’s pop, we’re nearly above them all. And there’s also an unfilled gap overhead that could quickly suck prices higher.
The Trade: Buy the March $230/$240 bull call spread for $3.50.
You’re risking $3.50 to make $6.50 if Visa rises beyond $240.
On the date of publication, Tyler Craig did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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