To this point in the market advance, there hasn’t been much for me to get excited about. What do I mean? Isn’t an S&P rally of 25% from its lows enough to get me excited?!? Yes … in terms of the general market. But, to be honest, my system thrives on the action of leading stocks–those with great sales and earnings growth, big stories and revolutionary products. And thus far, there haven’t been a ton of leaders setting up in high-odds buying patterns.
Why leading stocks? Why not focus on all stocks, junk included? Simply put, because leaders LEAD the market higher on sustainable runs. There has never been a sustainable rally that hasn’t featured many powerful leaders heading higher. And leaders are where the biggest winners in history have been found! So, while in the short-run it can be lucrative to play those lower-priced, beaten-down sectors, over time your best profits will come from the leaders.
And some of the best leaders are the big, liquid ones–the stocks that trade millions of shares per day that institutions can pile into. So, today, I want to mention two well-known companies that are reporting earnings before my next Cabot Wealth Advisory. Big gaps up could kick-off new advances.
Flash Player 9 or higher is required to view the chart Click here to download Flash Player nowThe first is Amazon.com (AMZN), which, truth be told, isn’t sporting the earnings growth these days that I crave. That’s mainly because of the recession, but more important to me is the fact that the firm’s Kindle, its e-book (and potentially e-everything) reader, could be an absolute game changer in the quarters ahead. The stock has come a long way from its lows of last year, but remains off its 52-week high. AMZN reports earnings next Thursday evening, and a strong gap of more than 10% that puts the stock above 85 or 90, would be tempting.
The next stock is Visa (V), which, remember, is still a young stock (just over one year old). It hasn’t risen like Amazon has the past few months, but the stock is attempting to break above multi-month resistance around 60, and the company’s growth numbers are steady (and the profit margins are simply insane). Earnings are out on April 29 after the market’s close. A big gap up of at least 10% will likely be buyable, assuming the stock is gapping above that key 60 level.
There are many other earnings reports to consider in the weeks ahead, but these are two big, liquid stocks that could turn into institutional favorites following their reports. Watch for them!