Earnings season is what makes or breaks a company and is the key
indicator of how a stock will perform in the coming months. If
you've followed earnings seasons in the past, you know that the
larger companies normally report their results earlier in the
season, and that means we have several big-name companies
announcing results this week.
Some investors think that the big profits are only found in
volatile small-cap stocks. It's true that there's money to be made
there as well, but when you ride the growth trend of a powerful
blue-chip stock that is dominating its market and posting strong
earnings results, the profits can be significant.
So I'm going to give you the names of five blue chips that are
reporting this week and explain the profit opportunities in each.
Plus, I'll also give you the names of five blue chips that you
should stay away from this week and in the coming months.
Blue Chip Stocks to Buy
The companies listed below are among the highest-rated in
and are expected to post spectacular earnings and sales results for
the first quarter of this year.
ARM Holdings PLC (ARMH)
ARM Holdings PLC
) is slated to have an outstanding earnings report when it
announces today. ARM makes microprocessors for popular devices like
) iPad. Apple announced spectacular earnings results last week, so
I'm expecting ARM to follow that trend. Analysts are expecting 22%
year-over-year earnings growth and a 21% increase in sales. These
predictions have been on the rise over the past few months,
however, and this makes it very likely that ARM will report
earnings in excess of these estimates and send its shares
Baidu Inc. (BIDU)
) is another big tech stock that is likely to take off this
earnings season. The Chinese Internet market has been red-hot over
the past few weeks, and I think this is setting the stage for a
spectacular rally in this sector. Baidu is expected to report 100%
year-over-year sales growth and earnings growth of 125%! These
numbers are spectacular for a company so large. My money is on BIDU
this earnings season, and I think we could see a nice pop when it
announces on Wednesday.
), like many other oil plays, is rising to the top of analysts'
lists this earnings season. Oil companies are reaping windfall
profits from the rising price of oil, and this is making analysts
crazy trying to accurately predict what these companies will earn
for the first quarter. Current expectations are for 35% earnings
growth, but these expectations have risen by nearly 30% over the
past three months. It's become nearly impossible for analysts to
keep up with this company's profits, and this is a good sign that
ConocoPhillips will outperform expectations this earnings season.
COP is expected to announce results on Wednesday.
Moody's Corp. (MCO)
) is a ratings company, and I think there are several people out
there in the market that would like to put Moody's under the
microscope. This is the company that every central bank chief is
afraid of, as a downgrade from them can spell disaster on the bond
market. Moody's, however, seems to be in great shape as a company,
and analysts are expecting big things this earnings season. The
company is predicted to report sales growth of 10% and earnings
growth of 15% when it announces on Wednesday.
Caterpillar Inc. (CAT)
), the construction and mining equipment company, is scheduled to
report results on Friday and, like the rest of the stocks on this
list, its numbers are expected to be fantastic. As last week's
housing starts and building permits report showed, construction is
starting to ramp up again, and mining has been on a heavy clip for
the past few months. Analysts are expecting 40% year-over-year
sales growth from this A-rated company and earnings growth of
nearly 300%! Expectations have been getting revised higher for the
past several months, and it is very likely that CAT could issue an
Blue Chip Stocks to Sell
Just because companies are big doesn't mean they're strong and
will return investors big profits, and the following list of
earnings laggards proves that point. You will likely be familiar
with each of these companies, but you may be surprised by how
poorly they are performing right now and how unlikely a blowout
quarter is for these household names.
Here are five blue chip stocks reporting earnings this week that
I want you to stay away from this earnings season:
Boeing Co. (BA)
For a lot of air-travel related companies, the skies aren't so
friendly these days.
) is one company that is suffering from decreased revenues related
to problems in the industry. In addition, Boeing has been dogged by
safety concerns stemming from an in-flight rupture of one of its
aircraft's fuselages. For the first quarter, analysts are expecting
a sales drop of nearly 1%. Earnings growth is expected to be anemic
and earnings could actually fall as analysts have been downwardly
revising their estimates over the past three months. This blue-chip
company will announce on Wednesday, and I'm not expecting good
Dow Chemical Co. (DOW)
Dow Chemical Co.
) is another company with a household name that makes our list of
stocks to stay away from this week. The company produces a number
of chemicals that are incorporated into products that we use every
day. Still, Dow doesn't quite make the grade in
. It gets a C overall, and its earnings momentum grade is an F.
This stock might hit estimates on Thursday, but the numbers are not
strong enough to add any value to your portfolio at this time.
Raytheon Co. (RTN)
) is a government contractor and a terrible stock to own right now.
The stock gets a D in Portfolio Grader, and expectations for the
company's performance this earnings season are not high. Analysts
are currently predicting an earnings drop of 8% and a sales
decrease of 1%. Earnings estimates have also been lowered over the
past few months, and this is usually a precursor to an earnings
miss. If you own shares of this stock, be sure to get rid of them
Aflac Inc. (AFL)
) may serve you right in times of need, but the only way you can
ensure that you'll profit this earnings season is by staying away
from AFL shares. The company gets a D in Portfolio Grader and
heading into earnings season, analysts aren't expecting many big
surprises from this company. Earnings expectations have been flat
and, in fact, have decreased slightly over the past week, and the
company's sales growth is nothing to write home about. Not even the
most creative advertising campaign is going to save this company's
stock come its earnings announcement on Wednesday.
Expedia Inc. (EXPE)
) isn't expediting its way to big profits this quarter. The company
gets a D on my screens and has a poor history of earnings
surprises. Over the past two months, analysts have downgraded their
earnings estimates on this stock by 19%, and the only surprise I'm
expecting for this company's earnings is to the downside. The
online ticketing industry has been hit by a number of different
setbacks, including refusals by airlines to provide schedules and
the purchase of a major ticketing software provider by
). Some companies are able to navigate the new landscape, but it
doesn't seem like Expedia is one of them. Make sure to get out of
this stock by Thursday when Expedia reports.