Earnings and earning-related news is the number one catalyst for stock movement. A strong quarter can dictate the direction of a stock for the following three months as can a bad quarter; in the past I have written in detail about such subjects, a domino effect following a strong or bad quarter. In this piece I am looking at four stocks that moved considerably higher after reporting earnings on Thursday, and I am determining if any can continue to trade higher.
After a painful year, shares of Responsys Inc (NASDAQ:MKTG) traded higher on Thursday after announcing earnings that easily exceeded expectations. The company grew by 20% year-over-year (yoy) and also issued guidance that was far better than the consensus. Overall, it was beat across the board, and after a year filled with loss it looks as though the company is finally seeing some momentum.
The online marketing company is a perfect example of a stock that could reverse the trend with one good quarter. The stock has gone through a very common phase: It was overvalued, then it corrected, and now fundamentals are outperforming the valuation. The company trades with a price/sales of just 2.0 and a forward P/E ratio of 28.81; both are very cheap for a company in this space, therefore I’d buy even after such large gains.
Loyalty Program Drives Gains
If you are a technical trader then perhaps you liked the “cup-and-handle” pattern of Safeway Inc. (NYSE:SWY), but if you’re a fundamental investor then you’re probably satisfied with the company’s earnings. Therefore, it’s a win-win for all involved. The stock is currently trading higher by 11% after meeting revenue expectations and blowing past bottom line expectations.
What’s really good about a potential investment in Safeway is that margins are still incredibly thin. To many this would be a negative, yet it provides room to grow. In the last 12 months the company’s profit margin has remained close to 1.20%, and there are many who believe the company could improve to margins of 2% at some point in the future.
Overall the company looks good — it saw a 2% rise in same-store sales and its loyalty program continues to be a major provider of growth. The company pays a great dividend and would probably make a good long-term investment.
Restaurant Stock Continues to March Higher
Jack in the Box Inc. (NASDAQ:JACK) has increased in value by 35% over the last year, and rose another 5% on Thursday. The company announced earnings that slightly beat on the top line but blew past expectations on the bottom line. The company has continued to cut its costs without sacrificing same-store sales, yet many are now wandering how much lower the company can cut costs?
