The recent earnings season has provided investors with many surprises, both positive and negative, and has sent some popular stocks soaring. Let’s look at three Nasdaq stocks to determine if they are good additions for your portfolio post-earnings.
The maligned tech giant
Apple Inc. (NASDAQ:AAPL) reported revenue and EPS that beat consensus estimates, but the real strength of the report was in iPhone sales for the quarter. Apple crushed analyst expectations in the mid 26-million unit range by selling 31.2 million units. The iPhone is by far Apple Inc. (NASDAQ:AAPL)’s most important product and the one most closely followed by analysts. It is important to note that iPad sales were below analysts expectations and gross margins continued to decrease. The report was well received by investors and Apple Inc. (NASDAQ:AAPL) has continued an upward trend in stock price.
Returning to IPO glory
One of the biggest earnings surprises was Facebook Inc (NASDAQ:FB)’s massive beat on the back of strong gains in mobile advertising. The company crushed analyst expectations on revenue and EPS, reporting $1.8 billion in revenue and $0.19 EPS versus expectations of $1.6 billions and $0.12.
The company also saw strong gains in users, as active users for the quarter were up 21% year-over-year. The report was well received by investors and the stock soared, recently eclipsing the $38 IPO price unseen since the actual IPO.
The entertainment roller coaster
Looking ahead
Of the three stocks, Apple Inc. (NASDAQ:AAPL) remains my top pick. The company showed that it can still sell its products and crush analyst expectations. The company is also about to end the lull in its production cycle and new product releases can be expected in the next six months.
Recent conversations with China Mobile could provide a major catalyst, as could the release of the iPhone 5S and the cost-effective iPhone rumored to be called the 5C. Updated iPads should be a given, and a rumored iTV could also add fuel to the stock price. At a current P/E under 12, the company has plenty of room to grow should these new products become hits.
Facebook Inc (NASDAQ:FB) has made impressive gains on the back of the earnings report, but I see current levels as a reason to trim positions. The company showed impressive financial and user growth, but I believe challenges remain. There have been questions about the company’s prevalence in the teenager market and its ability to court these users.
In my personal experiences, I have heard from several friends of college age that Facebook Inc (NASDAQ:FB) is not their go-to platform for social networking. The company has made big strides to adjust to customer usage as mobile use increases, but then it will need to continue to adjust to market trends. Lastly, I remain unconvinced that Zuckerberg is capable of effectively leading this company. I doubt I am alone in that sentiment.
Netflix, Inc. (NASDAQ:NFLX) has show incredible growth over the past years, and now must face the lofty expectations that come with such a meteoric rise. The company needs to increase new users. Additionally, I believe the sharing of accounts, where one person gives their account information to several, is a much larger problem than the company likes to think. Instituting some control over how many devices can be used on a single account could benefit the company and grow users. The company also needs to ensure that its created content remains profitable.
Buy and sell
Apple Inc. (NASDAQ:AAPL) remains a buy after earnings given the new products on the horizon and its reasonable valuation. I would not be buying Facebook Inc (NASDAQ:FB) at these levels. The company showed strength, but the recent increase in stock price seems a bit overdone. Likewise, Netflix, Inc. (NASDAQ:NFLX) does not seem like a buy at these levels given the lofty expectations that are backed into the stocks already large gains.
The article Should You Buy These Big Names After Earnings? originally appeared on Fool.com and is written by John Timmes.
John Timmes has positions in Apple and Facebook stock. The Motley Fool recommends Apple, Facebook, and Netflix. The Motley Fool owns shares of Apple, Facebook, and Netflix. John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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