Where the stock market goes on a given day, so do most stocks. Those that buck the trend usually have a specific reason to do so. Usually, strong earnings and guidance will allow a company to rise even if the rest of the market is dropping.
In today’s market, where the moves have been much more volatile, that hasn’t always been the case. That’s setting the stage for a bigger rally for any company posting strong numbers now.
One example is Uber (UBER). The ridesharing and delivery company reported that its ride bookings are back to 90 percent of pre-pandemic levels. But gross bookings, measuring total dollar value, are back to 95 percent. That allowed the company to raise its outlook.
While shares rose on the news, thanks to the current market fears, and the strong selloff in tech, shares ended up sinking instead. The stock is now down 46 percent over the past year, even as total revenues have soared 82 percent.
Action to take: If the company can continue with its growth trend, shares are likely to move higher from here. The company could even start reporting a profit by the end of the year, making shares a compelling rebound trade, especially when markets stop being so fearful and start heading higher.
For traders, the July $30 calls, going for about $2.05, look attractive here. They’re inexpensive enough to offer high-double, or even low-triple digit gains if shares start moving higher in the coming weeks.
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.