The S&P 500 could be days from creating a new all-time high, and this is all possible because we’re seeing signs of strength in the economy with superb earnings. Going into earnings season analysts were worried about results because of fiscal cliff and debt ceiling concerns. However, as of January 28, 60.8% of companies have beat top line expectations and 63.9% have beat bottom line expectations. With that being said, I am looking at the best of the best.
|Swift Transportation Co||(NYSE:SWFT)||1/23||28.45%|
|Super Micro Computer, Inc.||(NASDAQ:SMCI)||1/22||18.63%|
Netflix, Inc. (NASDAQ:NFLX) Delivers on All Metrics
Netflix tops the charts after its Q4 earnings crushed expectations. The company was expected to post a loss of $0.13, but instead posted a profit of $0.13 as it added more than two million subscribers and guided for subscribers to reach almost 30 million. The company’s domestic streaming margins rose 210 basis points and said that content costs are expected to grow at a slower pace. Therefore, the stock is returning back to its glory days, having rallied 143% in the last three months. The good thing is that Netflix is still about 45% off its all-time highs and has managed to continue growing its revenue during its 16 month period of flat trading. Although I do not own shares and believe there is a significant risk of a downtrend, I acknowledge that it could very well continue to trade higher now that investors are optimistic of its future.
Swift Transportation Co (NYSE:SWFT) Still Presenting Value
Swift Transportation continues to trade at new 52-week highs after being greatly undervalued prior to earnings. The company of course beat expectations, but more importantly grew in all segments of its business. Investors are now optimistic that the company will continue this strength throughout the remainder of this year. And the fact that the transport sector is trading at all-time highs bodes well for confidence. The stock continues to trade with a price/sales ratio of 0.50 and a forward P/E ratio of 10.95 which leads me to believe, that with improvements, it’s the best of the earnings bunch for a long-term investment.
At Second Glance the Reaction Seems Appropriate for Travelzoo Inc. (NASDAQ:TZOO)
After Travelzoo’s earnings report I immediately criticized the gains, however, much like the previous two stocks, it had traded flat for many months and was due for a breakout. At first I only looked at its modest revenue growth of 5%, but after further research I see that what’s impressive is its presence on social media channels such as Facebook, 23% growth in Europe, and conversion rate improvements. Therefore, this was a good quarter. With the stock being cheap compared to others in the space I think it presents little risk. However, I’d like to see one more good quarter before I am ready to turn all bullish.