Now that the U.S-China trade war is back into focus, the stock market has moved in quite a herky-jerky manner this week. On Sunday, investors got jittery over President Trump’s tweet that he would raise tariff rates on $200 billion worth of Chinese goods from 10% to 25%. The Dow opened 471 points lower on Monday — but anxiety over the trade war eased abruptly, causing buying pressure to increase and the Dow to swing from being down over 500 points to down just 66 points by the close.
However, those jitters turned into a full-blown panic after it was confirmed that the tariff hike could be imposed as early as Friday, raising concerns that a near-term deal would not be reached. Today’s selling marks the S&P 500’s biggest two-day slide since January.
Now, while we could see some additional near-term volatility, I do ultimately expect the Trump administration and China’s President Xi Jinping to reach an agreement and put this “trade war” to bed.
In the meantime, though, I believe the current selling offers us a great opportunity to buy the dip. However, it’s very important to buy the right stocks – ones with strong fundamentals, earnings growth and sales growth – since we still have earnings season, in addition to the macro headlines, to consider.
You see, at the end of the day, earnings are king. They will provide the catalysts a stock needs to move higher, as they show investors that the company has what it takes to make it in the long term.
This earnings season, we’ve seen a lot of that already. The companies that miss are being punished, but most companies that have posted solid results are being rewarded.
Let me use NAPCO Security Technologies, Inc. (NSSC) as an example. Since its founding back in 1969, NAPCO Security Technologies, Inc. (NSSC) has made a name for itself as a leading provider of professional security solutions. The company has a vast portfolio of products, including technologies for fire, intrusion, access control, wireless, video and door locking systems. Its security products are bought by and installed by locksmiths, system integrators and security dealers for commercial, industrial, residential, institutional and government clients.
NAPCO Security Technologies’ products are sold worldwide under some well-known security brands: Alarm Lock, Continental Access, Marks USA and NAPCO Security Systems. A few examples of the company’s products are StarLink Universal Wireless Intrusion & Commercial Fire Communicators, Trilogy electronic keyless access locks, CardAccess, Panic Devices and the Triple Play of Locksets.
On Monday, the company announced results for its third quarter in fiscal year 2019 — including record revenues. The provider of security technologies reported total sales rose 13% year-over-year to $25.1 million, up from $22.2 million in the third quarter of 2018. The analyst community was looking for revenue of $23.53 million, so NSSC posted a 6.7% sales surprise.
Third-quarter earnings soared 71% year-over-year to $3.1 million, or $0.17 per share, compared to $1.8 million, or $0.10 per share, in the same quarter a year ago. Analysts were looking for earnings of $0.12 per share, so NSSC crushed estimates by 41.7%. The stock soared nearly 10% on the earnings beat to a new 52-week high of $28.07 despite the broader market taking such a big hit. It also closed 2% up on the day.
This is the power of earnings.
I recommended NSSC to my Accelerated Profits subscribers back in February, and it’s now up almost 40% in just three months. I expect to see similar action in my other recommendations.
In fact, I just recommended a new stock in Accelerated Profits. The company is set to release its earnings tomorrow after the close — and analysts are expecting triple-digit year-over-year earnings growth! I’m looking for the company to surprise with even BETTER growth…which should send the stock soaring. That makes this your last chance to get in ahead of tomorrow’s report. Click here now to sign up and get all the details.