- Earnings season has largely been a bust for the market, but here are three stocks to buy that are running hot.
- Devon Energy (DVN): Shares surged 10% on Tuesday after the company announced a 27% boost to its quarterly dividend.
- Mosaic (MOS): Scored its strongest up day since topping last month, with a gain of 8.7% to reclaim the 50-day moving average.
- Camping World (CWH): Earnings drove prices to the doorstep of its first bullish breakout of the year.
Earnings season may have saved the best for last. Tuesday’s leaderboard was littered with stocks seeing significant gains following robust earnings. The powerful rallies stand in stark contrast to the lackluster performance we’ve grown used to, making them all tempting stocks to buy.
The market is exiting its quarterly dance a great deal weaker than when it began. Indeed, we just topped off one of the worst Aprils in years. Very few large-caps dazzled, and those that did were met with selling pressure nearly immediately.
It’s not that earnings were terrible. They simply weren’t good enough to steal the headlines from the daily drumbeat of inflation and a hawkish Fed. But today’s trio finally struck a chord with investors. It’s refreshing to see buyers finally make a stand and prices hold firm into the close. It’s not just Tuesday’s jump that beckons to buyers. All three of these stocks offer compelling price patterns that suggest more upside is in the offing.
Stocks to Buy: Devon Energy (DVN)
Oil stocks weren’t spared during last week’s temper tantrum, but many have come roaring back. The rapid recovery reaffirms dip buyers are alive and well in the energy sector. And we’re unlikely to see sustained weakness unless crude oil comes off its lofty perch. So far, sellers have been unable to knock the critical commodity substantially below $100.
Devon Energy (NYSE:DVN) is one of the best-looking oil stocks. It’s hot off an impressive earnings report that saw EPS jump to $1.88, quadrupling the year-ago quarter. Revenue swelled to $3.812 billion. In a sign of its commitment to shareholder returns, the company hiked its quarterly dividend by 27% to $1.27 per share while boosting its buyback program by 25% to $2 billion.
DVN stock ended Tuesday up 10% and a stone’s throw from a new all-time high. It’s exhibited relative strength for months on end, and I suspect the outperformance will continue.
The Trade: Buy the June $65/$70 bull call spread for $1.90.
You’re risking $1.90 to make $3.10.
The commodity boom has benefited Mosaic (NYSE:MOS) this year. At its peak, MOS stock was up nearly 100% for 2022. The blistering pace made it a fan favorite for momentum traders and those looking for exposure to stocks positively correlated to inflationary pressures. That said, last month’s indiscriminate selling still took a toll on the stock, pulling prices below the 50-day moving average.
But then, earnings came to the rescue.
Monday night saw the producer of concentrated phosphate and potash crop nutrients report results that missed expectations. Still, its earnings grew 323% to $2.41 a share versus last year. What ultimately matters is how investors react, and, in this case, they looked past the slight miss and gobbled up the down gap to send shares up 8.7% by day’s end.
MOS stock reclaimed the 50-day and took out its old pivot high. Consider $80 the next stop.
The Trade: Buy the June $70/$80 bull call spread for $2.85.
You’re risking $2.85 to make $7.15.
Stocks to Buy: Camping World (CWH)
Camping World (NYSE:CWH) rounds out today’s stocks to buy with an impressive rally off support. CWH stock entered this week’s earnings report at a critical juncture. $25 has been a key level halting multiple declines for nearly two years. It also hosts the 200-weekly moving average. With prices probing it and slightly oversold, the stage was set for a rebound heading into this week’s release.
The company delivered numbers worth celebrating, and buyers promptly jammed shares 6.21% higher. We’re now knocking on the door of a potential breakout over horizontal resistance and the declining 50-day moving average. We haven’t been able to clear resistance all year long, so a victory here would signal a change in character and finally give us a reason to buy.
The low share price makes naked puts a great play.
The Trade: Sell the June $22 puts for 90 cents.
Consider this a bet that CWH stock stays above $22. The max gain is 90 cents.
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