Stick With Earnings Winners in Today’s Economy

Earnings season is coming in mixed. It often does. In a bull market, a few misses can be written off. In a bear market… companies that miss tend to get punished.

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  • While that creates a potential buying opportunity, companies that miss in multiple quarters could be in for some rough performance. Traders looking for companies moving higher ahead of the rest of the market should focus on companies beating on earnings now.

    One such play is T-Mobile US (TMUS). The wireless telecom play just reported its most recent earnings. It beat expectations, and raised their forecast for the upcoming quarter. That’s a feat the company achieves often.

    More interesting of note is that shares bottomed out in January. The stock is now down just 7 percent over the past year, and has been trending higher during the recent bear market.

    Action to take: The company has been a solid performer, but is coming off a drop in earnings of nearly 25 percent in the past year. And unlike other telecom plays, the company doesn’t pay a dividend. But the company is one of just a handful of players in the high-barrier-to-entry telecom world.

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  • For traders, the current uptrend is likely to continue. The November $150 calls, last going for about $5.75, look attractive for a further rally from here. Traders can likely nab mid-double-digit profits on the trade.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.