I’m won’t lie to you.
I’m still in shock over Netflix’s (Nasdaq: NFLX) post-earnings movement from last week — down 35% in a single day on an earnings beat!
Just when you think this stock looks like the next blue-chip level company, it all changes. Netflix is a household name that almost everyone says they can’t live without.
Yet stock experts, from hedge fund managers to talking heads on CNBC, had it all wrong.
In just six months, NFLX went from trading around $700 a share to $220 today, a near 70% decline.
Earnings last week seemed to break the bank for many. Hedge fund manager Bill Ackman took an estimated $400 million loss as he cut ties with the stock.
That’s one of the most extreme post-earnings moves I’ve ever seen on a company that large.
We may not find a swing that big in our Earnings Edge stocks, but these companies have been on the move.
Today, we are looking at two stocks with similar charts. Both are on a rally that’s ripped higher despite overall market volatility.
Matador Resources Co. (NYSE: MTDR) and Lantheus Holdings Inc. (Nasdaq: LNTH) are bucking the sideways and choppy action in the market.
Now, with earnings due for them and many of their competitors, let’s see what you need to watch for to stay bullish.
Earnings Edge Recap
Last week’s Earnings Edge stocks Lakeland Industries Inc. (Nasdaq: LAKE) and Snap-on Inc. (NYSE: SNA) were on the verge of a breakout.
Lakeland fell over 5%, but stayed within its falling wedge pattern. No big breakout just yet. Snap-on tried to rally on earnings, but ended flat. The good news is the stock is already breaking out to the upside, so look for that trend to continue.
Earnings Edge Stock No. 1: Matador Resources Co. (NYSE: MTDR)
Earnings Announcement Date: Tuesday, after the close.
Expectations: Earnings at $2 per share. Revenue at $584 million.
Average Analyst Rating: Outperform.
Matador Resources is an oil and gas resource company. These stocks have been in focus lately as gas prices surged on the Russian war in Ukraine. But, as that slowed, oil and gas stocks have remained elevated.
That’s led us to this rising wedge pattern on Matador’s price chart. And it’s not just MTDR in this predicament. I’m following several oil and gas stocks making the same moves before pivotal earnings announcements.
MTDR’s Wedge Is Narrowing
You can see the narrowing support level in green and rising resistance level in red.
At some point soon, likely this week, this wedge pattern will break.
If it doesn’t, shares have room to keep running to the upside without breaking the channel. But a weak earnings report could reverse this uptrend — and fast.
With options, look to play a volatile move in the stock with a straddle, buying both calls and puts at the same strike and expiration. Then, as long as you get a big move, you can make some money from the earnings announcement.
Earnings Edge Stock No. 2: Lantheus Holdings Inc. (Nasdaq: LNTH)
Earnings Announcement Date: Friday, before the open.
Expectations: Earnings at $0.25 per share. Revenue at $129 million.
Average Analyst Rating: Buy.
Lantheus isn’t in the oil and gas industry, but it’s trading in a very similar rising wedge price pattern. And the therapeutics company is set to make a big move this week on earnings.
After its last earnings report, the stock soared almost 40% — a Netflix-like move.
And since forming the rising wedge pattern, shares are in for another breakout.
LNTH is a volatile stock, but the current trajectory isn’t sustainable. We’ll either get an upside breakout for shares to cruise even higher or a drop in the stock signaling a reversal of the recent price gains.
No matter what happens, this will be another pivotal earnings for LNTH.
Lantheus Is Set for a Big Move
Let’s just keep an eye on those key levels.
You could use a straddle once again. There’s no telling which way this stock trades. It’s nice to see it holding up well in the face of volatility, but sometimes that all comes out in an earnings report.
So I can’t pick a side yet.
Best to wait until after earnings and trade the stock continuing in the breakout direction.