How to Invest Ahead of Earnings Reports: Autozone, Big Lots, PetSmart

NEW YORK (TheStreet) -- The next few days will be big for do-it-yourselfers, bargain hunters and pet lovers and the companies that serve them. Today's pre-earnings buy-and-trade profiles include two companies that report quarterly results on Tuesday, March 4 -- one before the opening bell and one after the closing bell -- and four that report on Wednesday, March 5.

A detailed technical analysis chart about these stocks follows today's profiles on page 3. It explains my number-crunching terms and analysis.

Specialty retailer of automotive parts and accessories targeted to do-it-yourselfers Autozone (AZO) will report quarterly results before the market opens on Tuesday, March 4. Autozone set an all-time high at $561.62 on Feb. 12, exceeding my semiannual level from my proprietary analytics at $550.11.

The closeout retailer of toys and other merchandise Big Lots (BIG) will report quarterly results on Wednesday. The company reported disappointing quarterly results back on Dec. 6, and the stock gapped below its 200-day simple moving average. It traded as low as $25.50 on Feb. 5, then recovered to its 50-day SMA at $29.00 last week.

Retailer of pet food and supplies PetSmart (PETM) reports quarterly results before market open on Wednesday. Like Big Lots, PetSmart reported an earnings miss on Dec. 6 and gapped below its 200-day SMA. It traded as low as $62.12 on Feb. 3, then recovered its 50-day SMA at $66.87 last Friday, Feb. 28.


On to the analysis:

Autozone ($538.44, up 12.7% YTD): Analysts expect the auto parts retailer to report earnings per share of $5.56 before the opening bell on Tuesday, March 4. The stock set an all-time intraday high at $561.62 on Feb. 12 and is above all five moving averages in my "Crunching the Numbers" table on page 3. The weekly chart is positive but overbought, with its five-week modified moving average at $515.82, in a pattern that appears parabolic.

The stock has a gain of 41.6% over the last 12 months. My monthly and quarterly value levels are $517.96 and $488.84, with semiannual and weekly risky levels at $550.11 and $564.39.

Big Lots ($29.55, down 8.5% YTD): Analysts expect the retailer of closeout merchandise to report earnings of $1.42 before the opening bell on Wednesday, March 5. The stock has been below its 200-day SMA at $33.90 since Dec. 6, and begins this week above its 50-day SMA at $29.00. The weekly chart is neutral, with the Friday, Feb. 28 close above the five-week MMA at $28.81, with an oversold 12x3x3 weekly slow stochastic.

The stock has a loss of 11.3% over the last 12 months. My weekly value level is $24.12 with quarterly and monthly risky levels at $31.20 and $35.47.

Bob Evans Farms (BOBE) ($51.74, up 2.3% YTD): Analysts expect the restaurant chain and food product producer to report earnings per share of 53 cents after the closing on Tuesday, March 4. The stock traded down to $46.03 on Jan. 22, then closed last Friday, Feb. 28 above its 200-day SMA at $51.34. The weekly chart is positive with the five-week MMA at $50.45.

The stock has a gain of 27.1% over the last 12 months. My semiannual and annual value levels are $49.85 and $47.70, with quarterly and monthly risky levels at $56.53 and $58.38.

Boyd Gaming (BYD) ($11.62, up 3.2% YTD): Analysts expect the gaming and casino operator to report a loss of 22 cents a share after the closing bell on Wednesday, March 5. The stock has been trading back and forth around its 200-day SMA since Oct. 31, and closed just below the 200-day at $11.81 on Friday, Feb. 28. The weekly chart is positive with its five-week MMA and 200-day SMA at $10.97 and $8.84.

The stock has a gain of 76.9% over the last 12 months. My weekly and semiannual value levels are $10.43 and $10.05 with a quarterly pivot at $11.42 and monthly risky level at $12.40.

Hovnanian (HOV) ($6.07, down 8.3% YTD): Analysts expect the homebuilder to report a loss of 5 cents a share before the opening bell on Wednesday, March 5. The stock set its 2014 high at $6.80 on Jan. 3, then traded as low as $5.54 on Jan. 27, staying above its 200-day SMA now at $5.54. The weekly chart is neutral with its five-week MMA at $5.93, with declining 12x3x3 weekly slow stochastics.

The stock has a gain of just 3.8% over the last 12 months. Monthly and semiannual value levels are $5.66 and $5.13, with a semiannual pivot at $6.00 and a quarterly risky level at $8.70.

PetSmart ($67.06, down 7.8% YTD): Analysts expect the retailer of pet supplies report earnings of $1.22 before the opening bell on Wednesday, March 5. The stock has been below its 200-day SMA at $70.56 since Jan. 6, and ended last week just above its 50-day SMA at $66.87. The weekly chart is positive, with its five-week MMA at $66.40.

The stock has a gain of just 3% over the last 12 months. My annual value level is $63.78, with monthly and semiannual risky levels at $74.49 and $82.90.

My proprietary analytics chart follows on page 3, along with an explanation of how these numbers could work for you.

Crunching the Numbers with Richard Suttmeier

In the column labeled Last 12-Month Return, I show the percent gain or loss over the last 12 months.

There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.

The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart, with readings from Oversold, Rising, Overbought, Declining or Flat.

Interpretations: (stocks below a moving average listed in Red are below that moving average)

Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.

A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.

A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.

A stock with a neutral technical rating has a profile that is not positive or negative.

The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon. (Even Apple declined to its 200-week SMA in June 2013.)

The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.

The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.

The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon. (Even Apple tested or crossed its 200-day SMA in nine of the last 10 years.)

Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.

Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

At the time of publication the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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