The Walt Disney Company (DIS), Alcatel Lucent SA (ALU) and Coinstar, Inc. (CSTR) Could Pull Back After Earnings this Week

Page 1 of 2

Earnings often dictate the trend of a stock for the following three months. So far this year earnings have been strong, with 63.1% of companies beating top-line expectations and 62.2% beating the bottom line. Furthermore, stocks on average are making a 0.77% move higher after earnings, which are also connected to the performance of the overall market. However, with the market posting one of its worst days of 2013 on Monday, it’s possible that market perception may be changing, and here are three stocks I’d be wary about ahead of earnings this week.

A Lot of Questions for this Dow Component

The Walt Disney Company (NYSE:DIS) has outperformed the Dow Jones by four-fold over the last year and is somewhat expensive compared to the market. The stock has been pushed higher over the last year due to strong performance from its ESPN segment. However, with expectations for all segments being high, and a stock that has outperformed the market, I’d watch for a pullback after earnings.

The Walt Disney Company (NYSE:DIS)Disney is expected to post an EPS of $0.76 when it reports today. But more importantly than its top and bottom line numbers will be its guidance and updates on projects. The market already expects momentum from all of its segments, following recent investments into theme parks and resorts. It will be interesting to see if the company has been able to turn these investments into profits, and if new plans for Pixar and Marvel will be warmly welcomed by Wall Street. The stock is now flirting with all-time highs and if earnings are strong it’s sure to create new highs, but if weak then we could see a significant correction.

Recent Catalyst Not Yet Reflecting on Fundamentals

After a gain of more than 70% over the last few months, investors will now turn to fundamentals for Alcatel Lucent SA (ADR) (NYSE:ALU). The company remains undervalued but has rallied thanks to recent financing and a restructuring plan that could strengthen the company long-term. In the past investors expected horrible earnings from Alcatel-Lucent, but now after strong results from other companies in the space, there are many who expect a beat from Alcatel on Thursday.

An increase in CAPEX spending might help Alcatel to exceed low expectations. The problem is that these expectations are now rising thanks to bullish stock performance and earning reports within the industry. So far, Alcatel is yet to see a pullback, and the outlook for strong earnings might be a little premature. This is still a company with significant operational issues, and although CAPEX from telecom companies are increasing, Alcatel still faces hurdles with unprofitable segments of its business. I am a big believer in the re-emergence of Alcatel, but I think earnings could be a good opportunity for a decent pullback.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!