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The Most Important Things to Watch During Earnings Season

Posted: 14 Jul 2021 09:34 AM PDT

It's my favorite season, and I don't mean summer. And I'm not a hunter so I don't mean deer, rabbit, bear or duck season… I'm a trader. So I'm talking about earnings and what to look for in earnings season. 

All pro traders get a little bit happier this time of year…

I mean just look at Joy of the Trade Head Trader Jeff Zananiri… 

For our newer folks, earnings season is when a publicly traded company releases its most recent quarter's financial results. This gives us an inside look at the company's true performance and can indicate its actual value… So it's important!

As we enter my favorite season, it's good to go back to the basics and talk about what to look for in earnings season. So I've put together three things I look at…

One of which I consider the most important thing to watch for that can help you get in on more winners.

What to Look for in Earnings Season

One of the main things to look for during earnings is analyst expectations.

Have you ever heard about a movie from a friend who hyped it up… and then the movie was just OK?

You were disappointed, right?

Or in the reverse, say your expectations are set low and the movie is decent or even good… That movie then passes your expectations and it's a great feeling.

It's the same way with earnings and results. 

I want to see if there's a gap between what analysts' expectations for the company are… and what actually happens. It's a game of matching reality to expectations and judging whether or not the company over- or underperformed.

Another thing I look for in earnings season is growth. Have earnings improved since previous reports?

The caveat here is to make the right comparison. If you're looking at first-quarter earnings, do you compare them to the previous quarter — the fourth of the prior year?

No! Because as you know, the first and fourth quarters are two different animals.

What you want to do is take that first quarter of earnings and compare it to Q1 from a year ago — an apples to apples comparison — and see if the company grew or not.

There's one final thing I take a look at… and it's the most important of these three.

So check out my short video below to see what to look for in earnings season, and as always like and subscribe to our YouTube channel. Also, on Thursday, July 13, I'd like to invite you to an event for my Alpha Trades service where we can talk about earnings and more.

The post The Most Important Things to Watch During Earnings Season appeared first on Wealthpress.

6 Short Squeeze Candidates That Could Be the Next Explosive Moonshot

Posted: 14 Jul 2021 09:06 AM PDT

Short squeeze stocks like GameStop and AMC have taken center stage ever since retail traders on the WallStreetBets subreddit banded together to send these names to the moon.  

I haven't talked about short interest in awhile, but there are still some great opportunities out there…

So I figured it would be a good time to talk about the best short squeeze stocks to watch out for right now — and there are six of them, folks, which means you should grab your best note-taking pen and get comfortable.  

6 Short Squeeze Stocks to Watch out for 

But before we get into which short squeeze stocks to watch, I want to explain what a short squeeze is for my readers who might have forgotten…

In layman's terms, a short squeeze happens when short sellers get trapped in their positions. 

That means a certain percentage of a stock's open interest (or the amount of outstanding shares) is being shorted. When those traders cover their shorts — or go long — which they have to do, it tends to create a short squeeze. 

So what did I do to find these short squeeze stocks to watch? 

I calculated the total number of shares being shorted and divided it by the total amount of outstanding shares.  

By the way, I picked stocks that don't have huge market caps because they tend to be less liquid. 

When a stock that doesn't have a high float goes through a buying frenzy or runup, it creates the opportunity for a big rally and short squeeze. 

So check out my short video below to get all six of my short squeeze stocks to watch. And if you plan to trade any of them, be sure to let me know about it in the comments section at the bottom of this page. 

Don’t forget to subscribe to our YouTube channel if you haven't already so you can be notified as soon as we post our next video! 

 

The post 6 Short Squeeze Candidates That Could Be the Next Explosive Moonshot appeared first on Wealthpress.

Positive Earnings vs. Hot Inflation Data: How to Trade This Market

Posted: 14 Jul 2021 06:48 AM PDT

U.S. stocks are capitalization-weighted and large-cap stocks are holding the Nasdaq and S&P 500 indexes up near record levels. There continues to be vulnerability and these indexes may be topping out. Buying breakouts is not the play. Pullbacks offer lower-risk entry opportunities, and I've identified three great ones — and more in today's stock market recap.

But first…

Stock Market Recap

In the stock market recap, global stocks are mixed as investors weigh new inflation data and positive corporate earnings.

Hot inflation data and possible changes to the bond-buying program aren't the only factors investors are worried about. COVID-19 infections are rising in Asian countries, adding to fears that new variants may bring a resurgence to other parts of the world. 

The Consumer and Producer Price Index figures this week show inflation running hot. Chair Jerome Powell will give us a better idea of what the Federal Reserve thinks about these spikes in prices and what action, if any, will be taken. 

Mid and small caps have been consolidating, and I expect there could be a relative strength reversal between these and large-cap stocks. 

Roger's Radar: 3 Pullbacks on My Radar

Akamai Technologies (Nasdaq: AKAM) provides online software and services to businesses. AKM is coming off a swing high and has pulled back to its 50-day moving average. The stock has been on a strong run since March and will look to continue its upward trend after the pullback. 

A second stock also pulling back from a swing high is the fourth-largest cable operator in the United States. The third pick for today is a company I've mentioned before, and it is the leading 3D modeling provider. I've been waiting for a pullback on this stock, as its one-year return is 351.84%. 

In today's video, you'll discover which segment of the market is most vulnerable… which index we need to stay away from… whether financials are a good bet right now… an update on Fed policy… and three hot pullback opportunities. 

P.S. Big Investors Don't Want You to Know About This

We've all heard of insider trading…

It's unethical and indefensible, and the punishment — jail — fits the crime.

But this doesn't stop corporate insiders from using their information advantage by entering trades before others — bulking up their wealth. 

Meanwhile, everyone else is left scrambling to get in after their shares have catapulted the stock's value to new heights…

These corporate insiders are literally pumping their own stocks, and doing it 100% legally… We don't know about you, but we don't think that sounds fair.

So the Future of Wealth's Lance Ippolito has decided to even the odds.

Learn More Here

Check back each morning for Roger's Radar and the most important news and numbers in the WealthPress stock market recap.

The post Positive Earnings vs. Hot Inflation Data: How to Trade This Market appeared first on Wealthpress.

Inflation at Its Highest in 13 Years… and There Might Be More to Come

Posted: 13 Jul 2021 03:33 PM PDT

You couldn't turn on a T.V. Tuesday without hearing somebody yap about inflation.

But I suppose it at least gave CNBC something to talk about instead of the usual leaping from headline to headline.

I mean, they still did that too…You can't run a publicly traded media company dependent on advertising sales and pass up an opportunity to talk about super important economic events. Things like ransomware hacks, Elon Musk, or allow noted China non-expert Cathie Wood to opine on the Chinese stock market.

Source: CNBC

But you'd think for a moment that if that's going to drive the entire day's content, someone on that network would have at least read the damned report, right?

Apparently not.

Yes, it's the highest CPI number since 2008 — literally right before the global financial crisis — and in its next revision, it may even be higher.

And yes, if that's the case, then that would be the highest CPI level since 1990 — over three decades ago!

Source: Bloomberg

And yes, headline makers, prices for used cars, gasoline and food have all risen to incredible heights from incredible depths.

The used car supply chain has functioned terribly, essentially resulting in a shortage, energy prices are at their highest level since 2014, and food has… well just look at that red line for food!

Source: Bloomberg

Almost like our money doesn't buy as much food as it once did, right?

Yes, those things all deserve headlines — especially food.

But if you read the data, you'd already know that things like used cars, airfare and car rentals only make up about 3-5% of the CPI basket of goods.

And if you read Venture Society, then you know that a much bigger component of the Index — in fact the largest part — is shelter… because I wrote an entire article about it a month and a half ago.

In fact, shelter comprises around one-third of the overall index.

That means when it goes up, CPI really goes up.

Right now, the year-on-year change in shelter is coming in at 2.3% versus the multi-year, pandemic-driven lows of just 1.2%.

Source: Seawolf Research

That's low on an absolute level, but the slope of that line remains concerning to me.

In general, a change in housing prices leads to a change in the underlying rents. 

And when I chart that out using the Case-Schiller Housing Price Index versus the actual CPI Shelter numbers, the data bear that relationship out. 

Source: Seawolf Research

It takes a good long while for housing to work its way into CPI Shelter data — sometimes a couple of years.

And there's obviously a good reason for that… We tend to sign one-year leases.

But last year, looming evictions and pandemic skittishness caused a secondary epidemic of urban flight that we wrote about back in September.  

The moratorium on evictions managed to put a tourniquet on that wound.

But the reverse is literally happening as we speak as eviction moratoriums end and workers increasingly get called back into the office.

In the same way there's no efficient way to put the blood directly back into that tourniquet-requiring wound in the previous analogy, there's no pending legislation or executive order that can prevent rents from continuing to rise.

And that means there's inflation left to come… It's just not the inflation that you've gotten used to over the past year.

Bearish Housing Prices, But Still Bullish on Rent

The Case-Schiller Housing Index will come back down to Earth eventually.

There's a huge difference in demographics between older, richer homeowners and younger, poorer renters.

And if real estate inventories are low, prices are incredibly high, and interest rates aren't as attractive as a year ago, the pool of potential buyers will slowly but surely retreat from the market and begin to dwindle.

Of course, that's going to happen at the same time evictions kick in. Underwater rental unit owners will finally be freed from the eviction moratorium and put their properties up for sale, and the homebuilders will finally get their lumber orders and finish that glut of new construction.

And THAT is when housing prices will start to roll back.

But remember, there's a huge lag between a decline in housing prices and a decline in rents. As the chart above showed, that can take anywhere between 1-3 years.

And those new property owners won't exactly be inclined to lower it either!

THAT is why inflation won't be as "transitory" as our old friends at the Federal Reserve think it's going to be.  

No, inflation is going to be as sticky as a Jolly Rancher some kid left on a park bench in 100-degree heat.

As we've said a gazillion times before, though, the way to beat inflation is to own all the things that are inflating.

And if that's rent, there are two rental-focused real estate investment trusts (REITs) I like.

The first is Centerspace (NYSE: CSR), which focuses on multi-family apartments in the Midwest, and the second is American Homes 4 Rent (NYSE: AHM), which focuses on single family homes in Atlanta, Dallas and Charlotte.

All those markets are poised to show enormous population growth post-pandemic. And if my model is right, maximizing exposure to companies that control asset-based cash flow in those markets are going to fare extremely well.

They were both down with the broader market in trading Tuesday, so feel free to pick up a quarter share of each on sale tomorrow.

All the best,

Matt Warder 

The post Inflation at Its Highest in 13 Years… and There Might Be More to Come appeared first on Wealthpress.
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