Nothing better than waking up to a positive earnings surprise
and big profits.
Nothing worse than waking up to an earnings miss and heavy losses
in your portfolio.
Well January earnings season is about to kick into full gear and
there are few things that move a stock faster, up or down, than an
This is especially true now as investors are very concerned about
Europe and the concept of a global slowdown. Companies that
disappoint this earnings season will be crushed. This will lead to
devastating losses for those unfortunate shareholders. However, the
owners of stocks with positive surprises will be richly rewarded.
Now is the perfect time to align your portfolio to profit in the
As most of you already know, Zacks Investment Research specializes
in the coverage of corporate earnings. And more importantly, how to
profit from this information. So, today I'm going to share with you
3 proven strategies to profit from earnings announcements.
(Hint: Be sure to read to the end as the 3rd strategy is by far the
Strategy 1: Four Leading Indicators of Positive Earnings
I figured its best to get the most obvious strategy out of the way
first. The 4 leading indicators I refer to are the 4 factors of the
Zacks Rank. Before you skip this section, let me share some
information with you that you may not have known.
In the mid-1970s Len Zacks took his mathematical skills to Wall
Street where his job was to discover stock picking strategies that
would beat the market. He had a simple theory that was the
precursor to what became the Zacks Rank.
Len focused his research on finding stocks that were more likely to
have a positive earnings surprise and jump on the news. The journey
led him to what we know as the 4 factors of the Zacks Rank. Each
individually increases the odds of owning stocks that will enjoy a
positive earnings surprise.
However, when you combine them together inside the Zacks Rank it
becomes an almost obscene advantage for investors.
Earnings "Whisper" Opportunity Open Today
Len Zacks and his research team found the long-sought
Stock-Picker's Holy Grail. Finally, positive earnings surprises can
be detected BEFORE they're reported - with previously impossible
Now, as January earnings season gets underway, you can buy stocks
early and stay for their price pops. For example, this breakthrough
strategy jumped on Weight Watchers (
) one day before their surprise and sold two days later for a
+44.4% gain. It's in so much demand that we can only open it to new
investors for very short periods.
Get details before it closes again >>
Strategy 2: Stop the Bleeding
This second strategy is so simple, yet so hard for most investors
to do. So, I'm going to beat it into your head...
for your own good of course ;-)
Sell All Companies with a Negative Earnings Surprise
Yes, sell it immediately. Even after it falls at the open. Even if
it is for a substantial loss. Why? Better to take a 5-10% loss in
the short run than a 20 to 40% loss in the long run.
Keep in mind how earnings estimates are created. Both company
executives and brokerage analysts are doing their best to create
conservative estimates that the company should easily beat. And
when they fall short of those watered down estimates then it points
to one of two serious problems.
- Industry conditions have deteriorated and thus they missed
their forecasts. This problem will most likely not correct itself
in the near-term, leading to further disappointment.
- Company leaders are incompetent. Meaning that they are no
good at estimating their own earnings. Or that their strategies
for growth are ineffective.
Either reason should give you ample cause to abandon the stock now
and move on to greener pastures.
Strategy 3: Harness Real
Consider the following chain of logic.
- Earnings estimates come from brokerage firm stock analysts.
- These analysts are highly motivated to create conservative
estimates that can easily be beat. Why? If they have a Buy rating
on a stock, and the estimates are too high, then the stock is
more likely to disappoint. This would send the stock price lower
and the performance on their stock ratings would be poor (leading
to lower compensation).
- The closer to earnings season we get, the more accurate the
information the analyst has at their disposal to put into the
Add it all up and there is no good reason for an analyst to create
a higher estimate close to the date of the earnings report unless
they had a DARN GOOD REASON. Focusing in on those estimates closest
to the earnings announcement is where we found the
"whisper that becomes a scream"
...a clear indication from the analyst community of stocks more
likely to beat earnings by a wide margin. And most importantly,
rise on that news.
Where to Find These Earnings Whisper Stocks?
We can't share all the details of our proprietary whisper formula
with you, but the new system relies on two under-utilized signals
coming from the brokerage analyst community. These two whispers are
then layered on top of other time-tested elements such as the Zacks
Rank and Zacks Industry Rank to find only the best stocks in the
best industries to profit from each earnings season.
If you would like to receive our precise whisper trading signals in
the future, then we invite you to join one of our most in-demand
services. But a word of caution. When we re-opened it last October,
the response was so overwhelming we had to quickly close it to new
investors. It may close again at any hour. Don't delay. Click the
Learn more about
Zacks Whisper Trader
Wishing you great financial success,
Steve Reitmeister has been with Zacks since 1999 and currently
serves as Executive Vice President in charge of Zacks.com and all
of its leading products for individual investors. After our many
long years of research, he invites you to share an historic
earnings prediction breakthrough, the
Zacks Whisper Trader
To read this article on Zacks.com click here.