David, this might not be for everyone... What I do is start to accumulate the "top" ones of my list about 1 week or more before earnings come out (i.e. I already own JBIL,MANU,BBBY,NAUT,MLHR.. All of them are already up between 2-4 points since I began accumulating) I've traded these companies before and I tested the historical quotes to see the potential gains when these companies have positive earnings surprise..
My first plays I began with a few known quantities in April 1997. I started doing this extensively around July/August and saw it go quite well..
Bed Bath & Beyond, I started to accumulate on April 14 when it opened 24 7/8 (i.e. a little higher than the close of the 13th...) I held and watched it go up on day of earnings 2 3/16 on next day it went up and kept going up by 3/4 until it reached 28... on the 18th.. 4 days and 3 points later.
BATH & BEYOND INC COM- BBBY - DAILY PRICES
DATE OPEN HIGH LOW CLOSE VOLUME
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04/11/97 25.000 25.000 24.562 24.625 659,700
04/14/97 24.875 24.875 23.750 24.000 735,100
04/15/97 24.250 25.375 24.125 24.750 1,468,500
04/16/97 25.000 26.125 24.625 25.687 1,473,400
04/17/97 25.750 27.875 25.625 27.875 1,648,600
04/18/97 27.875 28.375 27.250 27.375 538,600
04/21/97 27.500 28.000 26.625 26.750 498,200
Earnings for second quarter coming out June 25, I started accumulating this on the close of 20th after volume had increased and the stock was up from 31 3/8 to 32... I held past 6/25/97 and sold on 6/26 at 33... No great shakes but it beats the high tech sector which can easily lose 5-8 points on an earnings play unless you stick the small/medium caps...
DATE OPEN HIGH LOW CLOSE VOLUME
---------------------------------------------------------------
06/20/97 31.312 32.000 31.000 31.625 524,200
06/23/97 31.687 32.375 31.625 32.250 852,300
06/24/97 32.375 32.625 31.125 31.625 467,300
06/25/97 31.750 33.000 30.625 32.750 828,500
06/26/97 32.500 33.250 32.125 32.500 1,022,500
IBC, MANU:
I started accumulating IBC (second time in since June, 1997) at 64 1/2 on 9/15 and sold it on 9/18 at 67 3/4... could have had more but volume was so slim I was afraid it would tank again... 3 1/4 points in 3 days..
DATE OPEN HIGH LOW CLOSE VOLUME
---------------------------------------------------------------
09/12/97 63.125 64.937 63.000 64.937 323,400
09/15/97 64.500 67.000 64.062 66.562 176,900
09/16/97 67.125 68.500 66.750 66.812 257,400
09/17/97 66.812 67.250 65.500 65.937 325,600
09/18/97 66.000 68.625 66.000 67.625 137,100
09/19/97 67.500 67.625 66.875 66.875 425,300
MANU: I bought a little late on Friday at 37.75 but I'm still holding.
09/19/97 36.500 40.750 36.250 39.875 897,500
Background: I do a thorough technical/fundamental analysis of the companies...especially the past 5 quarters. They are companies I've traded in the past or they are new high flyers/high growth companies that can go 3-5 points on a positive earnings surprise (i.e. VECO, ORBKF, SMOD, JBIL, TEK, etc). 1)Best Bets have surprised in 4 of the last 5 earnings quarter or 2) A few are expected to be profitable after a couple of negative quarters plus one 0% gain quarter (TIII, MEAD)..
The best sectors for plays are usually the Telecommunications Equipment group, Oil/Gas Machinery/Equipment group, Electric/Semiconductor Equipment, Oil and Gas Drilling, Computer Services, Computer Software, Finance/Broker, and Elec Control Instruments, Medical Instruments... |
