Earnings season is finally here! You may already know this, but earnings season is my favorite time of year, and I’m very excited for this one. This October, I fully expect companies in aggregate to continue to announce better-than-expected results, and, in turn, benefit from persistent institutional buying pressure.
I’m a numbers guy, so earnings season is very important to me. This is when companies essentially have to “put up or shut up.” When they release their quarterly earnings results, investors get to see the fundamentals of the company.
Can the company continually sell more of its products and services at higher and higher profits? Can it continue to innovate and adapt to marketplace changes and maintain a leadership position? In the end, what makes for a great growth stock is the ability of the company to continually sell more of its goods or services at high levels of profitability.
Basically, we get to see how healthy the company is and if there’s any potential growth ahead of it. This will keep that institutional buying pressure, or the “smart money,” rolling in. The healthy companies that report strong results are typically rewarded and jump on their numbers, while the companies with weak results are punished. So, their stock sells off as investors flee.
Getting Out Before a Weak Earnings Report
Let me use Netflix, Inc. (NFLX) as an example.
This was a stock I recommended in Accelerated Profits way back in May 2017. It was a strong performer (and one of our longest holdings), thanks to steady growth and strong fundamentals over the years. Then, in June 2019, I recommended selling and locking in our triple-digit gains – 120% to be exact.
You see, I wanted us out before the company’s second-quarter earnings results. And as you can see in NFLX’s chart below, that was clearly the right call.
The stock took a major hit after releasing its quarterly report in July. It fell about 11% on the news, and it’s failed to significantly bounce back since, with new competition from Apple, Inc. (AAPL) and The Walt Disney Company (DIS) to contend with now.
Now, the company’s third-quarter earnings report, released on Wednesday after the close, did give the stock a nice 6% boost at the open on its earnings beat. The company reported earnings per share of $1.47, which topped analysts’ estimates for $1.04. So, NFLX posted a 41.3% earnings surprise.
However, the stock still ended up giving most of those gains by the close.
So how did I know to get out of the stock before its shares plummeted on earnings?
Easy. Project Mastermind.
Project Mastermind is my unique system driven by artificial intelligence (A.I). It finds the highest-quality companies with stunning earnings and sales growth, as well as strong buying pressure. When those fundamentals begin to weaken or the buying pressure starts to dry up, my Project Mastermind system immediately alerts me and tell me exactly when to sell. This was exactly the case with Netflix.
Companies that report strong earnings should do well, and my Accelerated Profits Buy List is stacked with them. These stocks are characterized by 25.6% average annual sales growth and 49.4% average annual earnings growth. So, as third-quarter earnings are released in the coming weeks, I expect these stocks to rally as they post wave-after-wave of stronger-than-expected results.
Earnings season will really get underway for my Accelerated Profits stocks next week, so now is the time to invest before the stocks surge on their earnings beats. I also released a new recommendation on Tuesday and am about to pull the trigger on another. If you want to jump in early, click here for all the details and I’ll help get you started.