BALTIMORE (Stockpickr) -- Earnings season is finally upon us once again, the only potential antidote to the market turbulence we've been seeing in recent weeks. But will companies be able to live up to analysts' expectations, or will second-quarter numbers send the market on another leg lower?
It's been an interesting couple of weeks for the market. Following one of the biggest single-week drops in the last couple years, fortunes reversed last week, with the
and other indices climbing more than 5% in the shortened holiday trading session. The question now is whether that uptick will be sustained -- and frankly, it all comes down to the numbers Wall Street's biggest firms put up on display starting this week.
Investing in companies ahead of earnings can offer investors significant gain potential at the risk of equally impressive losses. But that benefit is still too hard to ignore, so for this week's Rocket Stocks plays, we'll be focusing on companies that are reporting their numbers to Wall Street this week.
For the uninitiated, Rocket Stocks are our weekly list of companies with short-term gain catalysts and longer-term growth potential. In the last 52 weeks, Rocket Stocks have outperformed the S&P 500 by 48.34%.
Here's a look at
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5 Defensive Stocks for July
Fast food giant
has been having a good year, up more than 15% already in 2010 despite the fact that the market's in the red over that same period. The company, which owns perennial quick service brands Taco Bell, Pizza Hut and KFC (as well as several others), is a major player in its category, with more than 37,000 units in more than 110 countries.
Yum!'s biggest growth driver in recent years has been China. Yum was one of the early quick service names to enter the Chinese market, and as a result, its operations are among the best. In addition to one of the largest geographic footprints in the People's Republic, Yum! also sports control over its supply chain and average unit sales that are substantially higher than many of its competitors. Although competition continues to ramp up in China, Yum! still has room to expand in the market, potentially cementing its place as the No. 1 player against late to the party challengers such as
Yum!'s set to announce its second-quarter 2010 earnings tomorrow, on July 13. With improving fundamentals at home and the rising yuan in its biggest growth space, those numbers could get investors excited -- and show us intraweek gains.
It's been anything but good times for construction materials firm
, the Dallas-based cement and stone manufacturer. In the wake of the construction spending slowdown, this company has seen its once-encouraging income growth reverse -- and the losses continue to mount. But with earnings scheduled for this week, we could see this firm impress otherwise anxious analysts.
Texas Industries is one of the biggest cement players in California, one of the areas hit hardest by construction cutbacks and state infrastructure budget problems. As a result, the company's facing excess production in the Golden State, a factor that's contributed to a 15% drop in cement prices in the last year. And Wall Street generally expects cement sales to continue to follow a downward path in 2010.
But bleak estimates could provide the opportunity for Texas Industries to impress this quarter. With the firm teetering on the brink of profitability, this company's ability to stay in the black for another quarter could generate the kind of gains we're looking for. Still, this trade is on the speculative side, so invest accordingly.
Who Owns Texas Industries?
It's been good times lately for
. The U.S. banking giant is seeing solid performance from its investment banking division, even as its retail banking and credit card divisions languish along with those of its competitors. But with significant distressed assets purchased at rock bottom prices starting to mature, this bank could start reaping the rewards in the near term.
There's little argument that JPMorgan Chase has struggled immensely from the crash of the housing market. The major bank was every bit as exposed to the less-attractive elements of the housing market as many of its peers, and the underperformance of U.S. real estate continues to plague its income statement. That said, its risky decision to step in and acquire storied investment firm Bear Stearns has proved to be a prescient one. So was the decision to buy WaMu from the FDIC; the transaction gave JPM one of the largest deposit bases in the country.
With bullish sentiment coming back into financial stocks this week, shares could benefit in a big way from good earnings on July 15.
For more stocks that made this week's cut, including
Research in Motion
( RIMM) and
, check out the
-- Written by Jonas Elmerraji in Baltimore.
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At the time of publication, author had no positions in stocks mentioned.
Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.