The other day on the Kudlow Report on CNBC, I expressed concern
that the lack of future QE (quantitative easing) was taking the
wind out of the market's sales. Markets have become addicted
(mostly psychologically) to the FED buying up US treasury bonds and
keeping rates low.
I also noted that a stronger dollar may hurt some of the earnings
of multinational companies that make a good portion of their money
overseas then convert those earnings into dollars; the stronger the
dollar, the weaker the conversion.
But are we really worse off without QE? We all agreed that weaning
the markets off of the FED's bottle may be a little painful at
first, but is a stronger dollar and lower commodity prices all that
bad? For some of the companies in the S&P 500, yes, but at the
end of the day, there is only one thing that really matters:
earnings. If there is any catalyst that will take the S&P up
another 15% over the next year or two, it will have to be earnings.
The Only Truth
We live in a world where information flows at the speed of light.
Within seconds, millions of people are made aware of breaking news
in every nook and cranny around the world. Heck, people even tweet
and blog about public bathrooms that aren't clean.
All this communication makes us investors a bit edgy. Most
professionals refer to the stock market as being "headline driven".
This goes deeper than just buying on good news or selling on bad
news, it's that most of us don't really understand the
ramifications of the headlines that we are reacting to! Even I am
Think about this...
There are stocks out there that are making money, growing earnings
with momentum and are even in popular sectors, yet they are being
ignored because investors may not fully understand their business,
never heard of them or, better yet, are not even sure how a
headline such as "No More QE" will affect that company. But instead
of taking the time to dig deeper and find the truth, many just sell
(or ignore) it and move on.
Earnings "Whisper" Opportunity Closes
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 with April earnings season at hand, you can buy stocks early
and stay for their price pops. Many quick small gains compound into
sizable profits. And sometimes the gains aren't so small. For
example, Zacks' whisper strategy jumped on Weight Watchers (
) before their surprise report and sold two days later for a +44.4%
Access to this strategy closes Saturday, April 7. Get details
I mean, why not? There are thousands of stocks out there and you
could always just buy Apple, which is what everyone else is doing.
The reality is that
are the truth; earnings results and the commentary that comes along
with them is the end all, be all of a company's fiscal health,
period. After all the hype, headlines, pundits, comments, blogs,
tweets, Twits, trends, Facebook likes, Google searches and cool
commercials, it all comes down to how much money the company is
making and whether it will continue.
Finding the Truth
Beyond the headlines and stocks that everyone talks about, there
are hundreds of good stocks out there that have strong earnings
trends. Unfortunately, the only people who are close to these
lesser-known companies are the analysts who follow them. Analysts
work day and night doing what their name implies, analyzing the
earnings trends of companies. Not all analysts are perfect and,
yes, they do make mistakes. But if you track their progress and
then look at 10 of them who are covering just one stock and begin
to aggregate their opinions, well now you are getting somewhere.
If you want to branch out and get away from the same stocks that
are always in the news and headlines, you need to dig deeper and
start studying some of the analysts' best alternative picks in each
sector. Of course this is time consuming, but if you gather good
intelligence, you will be more likely to discover a diamond as
opposed to a lump of coal. Another problem is that some of their
data costs money; you may or may not get this research from your
broker, but it doesn't hurt to ask.
For those of you who want some help, you are welcome to check out
earnings service. Through a complex Zacks algorithm, it sorts
through analyst opinions, past trends and EPS estimates to predict
positive earnings surprises before reports are released. It calls
such surprises with an unheard of 8 out of 10 accuracy.
Last earnings season, I used this strategy to find stocks with a
77% win rate.
Many of the companies it targets are not the most well known, but
then again you might not want them to be. I'd much rather stumble
upon a gem without several thousand people looking over my
For that reason, admission to
is restricted and access closes for new investors Saturday, April
7. So I invite you to look into it right now:
Learn more about
Zacks Whisper Trader
Jared Levy is a Zacks Rank stock strategist with special
expertise in earnings. He provides private recommendations and
commentary for the groundbreaking
Zacks Whisper Trader.
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