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3 Earnings Trades for the Week

MINNEAPOLIS ( Stockpickr) -- I am simply amazed by the moves in stocks releasing earnings this season . It is hard to believe that a singular event can result in such wild swings, yet that is exactly what is transpiring. I think the action is the result of a new paradigm -- a new normal, as they say.

The stock market is supposedly efficient with its pricing of stocks -- but how, then, can a stock move 30% or more, as Brightpoint (CELL) did last week? Do you mean to tell me that nobody in the market had any idea that this particular company was performing so well?

It defies logic, but if we can correctly predict the moves before they take place, we can make big money. At the end of last week, three more of our earnings stocks released results. Let's see how our trades panned out.

Related: Rocket Stocks: Baidu, Nike, Paychex

Coinstar (CSTR) was the big mover in the group after the company announced results that were slightly weaker than its most recent. In my view, such an outcome was already priced into the stock, but shares slid nonetheless. Despite the weakness, longer-term investors may view the stock as a buy today.

Bebe Stores (BEBE - Get Report) missed guidance with a bigger-than-expected loss. Shares were fairly resilient in the face of that news and held their value, whereas I was expecting them to fall on such news. In my opinion, shares are being supported by an overall bullish sentiment in the market that I believe to be inefficient in terms of pricing Bebe shares.

Bebe is on the decline, and there is nothing in the recent report to suggest that things are about to change. This stock should be sold by anyone owning shares. Looking for a stock to short? Look no further than Bebe.

MoneyGram (MGI - Get Report) reported a smaller loss than expected, but shares barely budged on the news. Again, I believe the lack of any sort of move indicates a mistake by investors. The overall economic environment combined with MoneyGram's improved operating results make this stock a steal at current prices.

This week the earnings train continues to chug along. The pundits and experts continue to pound the table for stocks to take a breather. The markets refuse to obey. If anything, we are seeing pauses as new thresholds are met. This is classic base-building in the midst of a bull market run.

Keep that in mind as we look at companies releasing earnings this week.
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BEBE $0.46 6.13%
BWLD $160.24 -0.02%
MGI $8.78 -0.68%
SF $45.36 -0.77%
SCSS $23.62 -3.36%


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