(WFC - Get Report)
: The sixth sense I have on this stock stuff has been telling me that the market wants to sell banks into earnings on fear "sell-the-news" events will occur. These tend arise when the market has run higher in advance of the fundamental stories. However, watch the major sector plays and see if they are losing ground into earnings, as the news may be bought when all is said and done. I came out positive on Wells Fargo
, and would let it ride into earnings.
On this stock, I am looking for two overwhelmingly positive fundamental attributes to surprise the Street, and one reassuring aspect. First, I'm seeking an upgrade in CEO John Stumpf's comments on the housing market -- and keep in mind that this is usually a conservative bunch. Second, I'm looking for strength in the housing components of the business. Credit origination was a nice aspect of the September employment report, and homebuilder backlogs were robust. Third, I'm watching for strength in housing components to accentuate what the company has done to bring down -- rather than "contain" -- operating expenses. If compensation is tied to revenue, for example, that would garner a thumps-up from me.
(JBHT - Get Report)
: For realsies, you are doing yourself an analytical disservice if you're avoiding this stock into earnings -- as I recommended -- based solely on earnings warnings from
. That's the easy way out, and I hate that. Grasp why you should shun the stock, and the rest of earnings-season derivative ideas could fall into place with ease. There is a high probability that revenue worsened sequentially in the dedicated contract services and truck segments, which place too much of a burden on the capacity solutions and intermodal businesses. Those latter two divisions have been the standouts, but they can only do so much heavy lifting as their sales moderate alongside the slower growth businesses.
Assorted Odds and Ends
- Financial comparisons continue to be tough for companies, and Fastenal (FAST - Get Report) is a prime example. The market is asking you to pay up -- using historical norms and the pre-summer rally -- for earnings of companies that are decelerating, even considering any cost cuts that are padding profit margins. I find it difficult to get excited on this proposition, especially given that there is risk to the decelerating growth projections.
- GNC (GNC - Get Report): Give it a go-long into earnings, which should come later this month. The story will not disappoint, and I expect a good revision to the full-year earnings outlook, again. The company's online marketing is the best in the nutritional space. Further, this is a U.S.-centric business. It also offers products that, in my opinion, will be the last to be traded off should the fiscal cliff derail consumer confidence. This thesis deserves to be priced in now.