Stone-Cold Earnings Lock of the Week


Strong earnings from Apple (AAPL) helped propel the market higher last week. The technology king continues to mint profits with no end in sight. Given the relatively low valuation of that stock, it is no surprise shares were significantly higher on the news.

Below the surface of that good news, individual stock reports are not as bright. My stone-cold lock of last week, Buffalo Wild Wings (BWLD), released earnings that were only so-so. The company slightly beat the earnings number, but missed on revenues.

Shares fell immediately in the hour of trading remaining after the report was released. The stone-cold lock recommendation of a Buffalo Wild Wings May expiration put exploded more than 30%. Not bad for but an hour or two of holding the position.

In full disclosure, Buffalo Wild Wings recovered those losses in the next trading day, but when trading earnings we are not concerned about the long term. These recommendations are for the first moments of trading after news is reported. Get in and get out.

With the gains in stocks, the downside risk for individual names remains high. The trigger for a potential collapse in share value is likely to be earnings. If expectations are not met, the market typically adjusts its future outlook and valuation of a particular name. The corrections can be fast and furious creating a wonderful trading opportunity for those looking exclusively at earnings reports.

Where will we find the winners this week? Given that we are in the midst of earnings season we won’t have to look far.

Here are five names reporting this week, including my stone-cold lock of the week earnings trade:

James (Jamie) Dlugosch is a contributing editor to MSN Money, The, and Traders Reserve. He has a long and distinguished career in the investment industry that includes editorial and publishing stints with the highly rated Rational Investor, The Prudent Speculator and the current Penny Stock Winners. Jamie was a contributing editor to InvestorPlace Media where his content was syndicated to numerous on-line financial sites including MSN Money and AOL Finance. At the turn of the Millennium he was the President and CEO of Al Frank Asset Management where he honed his skills under the tutelage of the well respected guru, Al Frank. With The Rational Investor Jamie adapted Al Frank’s long-term market beating strategy to reduce risk and increase ease of use for subscribers. He was quickly rewarded for his efforts by compiling the second highest total return of all investment newsletters in 2004 according to The Hulbert Financial Digest. His investment approach has produced winning returns in competitions held by MSN Money in their long running Strategy Lab. He also has successfully raised private capital for a variety of private ventures including the purchase of Al Frank Asset Management, an investment now worth many times its original cost. Jamie is frequent guest and contributor to a wide range of financial television, radio and internet broadcasts including CNBC, Market Watch and MSNMoney. Jamie holds a B.A. in Political Science from UCLA and a Masters in Business Administration (MBA) from the University of North Carolina, Chapel Hill. He resides in Minneapolis, MN with his wife Sarah and two daughters, Julia and Ellie.

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