1 Stock You’ll Want In Your Corner This Earnings Season
Earnings season has given us some solid results, with better-than-expected reports mostly in line with recent quarters, so far…
Of the S&P 500 stocks that have already reported earnings, 79% have beaten Wall Street’s profit estimates.
Even though events like the war in Ukraine and the Federal Reserve’s fast plan to raise interest rates to combat inflation weigh heavy on our minds (and wallets), consumers are still willing to pay a premium when it comes to consumer items.
Coca-Cola Co. (KO) reported earnings and sales on Monday that beat forecasts…
The company’s sales were up 16% to $10.5 billion, surpassing Wall Street’s expectations of $9.8 billion. Price hikes were the main driver of these results with the costs of their products up 11% in North America and 7% globally. But regardless, Shares of KO traded 1.06% higher, hitting a new 52-week high early Monday, despite the market still being volatile from last Friday’s massive sell-off.
Microsoft Corp. (MSFT) also beat analysts’ expectations across the board on Tuesday with quarterly revenue hitting $49.4 billion — that’s an 18% increase for those of you who are keeping track. Its sales and marketing expenditures were up 10% from the same quarter a year ago, the fastest growth in over three years.
But we’ve also had some negative reports, and maybe none as much as entertainment company Netflix Inc. (NFLX)…
Shares of NFLX tumbled 35% last Wednesday after the streaming services revealed it lost 200,000 subscribers in the first three months of the year, when analysts expected it to add about 2.5 million. Netflix still has 221.64 million subscribers, but the company expects that number to fall another two million in Q2.
This is the biggest decline Netflix has experienced since 2004, pushing its share price back to where it was trading in 2018.
Tech giant Meta Platforms Inc. (FB) is set to report its latest quarterly results on Wednesday after the market close, followed by Apple Inc. (AAPL) and Amazon.com Inc. (AMZN) after the closing bell on Thursday.
These companies are some of the biggest in terms of market value, which means they hold the most sway over the S&P 500.
The rest of this week and earnings season will be interesting to say the least, so I’ll be analyzing all of the reports as they continue to roll in.
While we gear up for more quarterly earnings reports, I have a high-income, low-risk trade in Best Buy Co. (BBY).
Best Buy is all about enriching lives through technology, which was a huge lifesaver for many of us during the early days of COVID-19.
But what most people don’t know is that this company was originally an audio specialty store called Sound of Music.
Uh-huh, like the film starring Julie Andrews.
Now, the company’s brick-and-mortar stores sell a wide range of items like at-home theater equipment, TVs, mobile phones, digital cameras, video games and appliances such as washing machines and refrigerators.
All of these products helped cater to peoples’ needs when our lives and movements were a bit more restricted. So it shouldn’t be any surprise when I tell you this electronic retailer not only survived the pandemic, but actually thrived during it.
With people updating their home offices for a more remote regimen, Best Buy’s revenue in total sales rose 8.3% to $47 billion in 2020, along with a 144% increase in online sales in the United States alone. In fact, I know a guy who has upgraded his home setup and monitors three times in the past two years. He even added a small putting mat and massage chair for “extra comfort,” but that’s a story for another time.
Best Buy is mostly known for its Geek Squad. It offers not only online help, but in-store and at-home repair services for computers and other devices through this brand. The company doesn’t disclose separate financials for this side of the business; however, it’s said that the tech-support service has more than 2 million subscribers at $200 a pop.
In a recent news release, Chief Financial Officer Matt Bilunas shared that the company expects a lower short-term forecast since it is coming off a period of very high demand. But it also anticipates that demand will return to levels higher than pre-pandemic sales.
The company also revealed a 26% increase in its quarterly dividend and said it’ll spend about $1.5 billion on share buybacks in the next 12 months.
The stock also recently flashed an Income Trader Volatility (ITV) “buy” signal.
ITV shows that volatility is transitioning from above average to below average, which is the ideal time to sell options because options premiums are elevated when volatility is up.
Best Buy isn’t expected to make another earnings announcement until the very end of May. But to help minimize our risks, I am recommending a trade that is protected by strong technical support and will be open for about three weeks.