Earnings season has officially begun. Alcoa (NYSE: AA) reported better-than-expected earnings on Friday of last week, which added 6% to the stock and helped push the Dow over 11,000. This is the perfect example of the power of earnings and this is precisely why we focus on quarterly financial reports.
With the season underway, it’s time we look at earnings and sift through the details of our companies’ financial reports due to come out in the next several weeks. Here are three stocks to watch that could post strong numbers.
Volterra Semiconductor (NASDAQ: VLTR) announces earnings Oct. 25. This is a semiconductor company and with all the economic jitters we have been getting this summer, the shares have been volatile despite the phenomenal growth in operational performance.
Second-quarter profit rose eightfold to $9 million, or 34 cents per share, as revenue grew 77%. The operating margin increased from 11% to 26%. If the company delivers good earnings again in late October, I think the fear that built into the stock will turn into greed and shares will get moving in a hurry.
Eaton (NYSE: ETN) will report earnings on Oct. 18. This is a classic American industrial company. Eaton makes electrical components as well as hydraulics components for truck and automotive drivetrain and powertrain systems. Estimates call for a 13% rise in sales but I think ETN has a real shot of coming in higher than expected. Also, analysts have upped earnings estimates 15% in the last 30 days. This bodes well for an earnings surprise.
I don’t want to call it a long shot, but my last pick this week has a few factors that could push shares sky high if all goes well.
Skechers USA (NYSE: SKX) is a retailer that has a very popular workout shoe on the market right now. There are a lot of investors out there that are betting this is a fad shoe and that sales will quickly dry up and leave the company vulnerable. That’s why many are shorting the stock, hoping for a fall. While Skechers’ Shape-up shoe may turn out to be a fad, it’s not going to happen in the near term and smart investors will get in ahead of earnings and benefit from the inevitable short squeeze.
The short ratio as percent of the float is approximately 30% as I write. This is a significant percentage. In August there were 8.54 million shares shorted, while as of Sept. 15 that number has risen to 9.02 million. Sketchers will announce earnings on Oct. 18 and because of robust sales, I think they will be good. If I’m right, all of the shares that are sold short will have to be covered. That means short sellers will be forced to buy back shares and create massive buying pressure that will lift the stock. This is a big opportunity for Skechers to prove Wall Street wrong and for investors to profit from a well-run company.
As of this writing, Louis Navellier was recommending these stocks in his Quantum Growth and Emerging Growth newsletter.
Top 5 Stocks for the 4th-Quarter Surge. Louis Navellier details five stocks set to deliver record earnings and jump 30%-50% in the next 90 days as the big money piles in. Get their names online here, including Louis’ buy-below and target prices.
