This post Coming Soon: The Most Profitable Earnings Season Ever appeared first on Daily Reckoning.
We spoke yesterday about why now is an excellent time to buy Apple (NASDAQ:AAPL).
If you missed it, none of the three reasons had anything to do with the popularity of the new iPhones.
That’s because there are more important factors that will boost the stock price — factors that most investors are currently missing.
But the best part?
The same factors working in the favor of Apple will also buoy other stocks. But you better get in quickly because it’s now October, which means these stocks won’t stay cheap for long…
So what does October have to do with the prices of this special group of stocks?
The answer is the most exciting (and profitable) time of the year for investors — earnings season.
Four times a year, every publicly traded company is required to report the results of their last business quarter. And the next earnings season officially kicks off next week with reports from big banks Citigroup, Bank of America and JP Morgan Chase.
Three factors that most investor pay attention to are revenue, earnings per share (EPS), and guidance.
As we’ve talked about in the past, guidance should be the most important factor because this tells investors what company management expects business to be like in the future — which ultimately decide stock prices. But the two other factors (revenue and EPS) are also important because these figures allow investors to update previous expectations.
If you’ve ever been watching CNBC or Bloomberg after a company reports earnings, this is why the stock price usually jumps so dramatically. Investors need to be quick to react to the positive or negative news or risk missing the trade.
But what makes this earnings season even more exciting are the positive tailwinds that should boost the numbers reported by U.S. companies.
Let me explain…
Earnings Tailwind #1: This Bull Market Is Real
We are currently in the second longest bull market since World War II. And I expect the market to continue higher for the foreseeable future.
Take a look at the facts.
Consumers right now have more disposable income than ever.1 This is due to the unemployment rate hovering near record lows and the stock market being at all-time highs. This equates to consumers spending more at the companies whose stocks are fueling the rally.
And on top of all this, the last earnings season was the best we’ve had in over a decade with the highest number of S&P 500 companies beating analyst expectations.2 Keep in mind, last earnings season was in July. So ask yourself… what’s changed in 3 months?
Don’t get me wrong, you should always be properly allocated. But investors that are too busy waiting for a correction are the same people who haven’t made a dime in the last few years.
“I still think the markets have great opportunity to keep going higher” says our former floor trader and resident analyst, Alan Knuckman, “just because we’ve come a long ways doesn’t mean we can’t go …read more
Source:: Daily Reckoning feed
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