Last week’s Earnings Edge stocks are on the move.
While Toll Brothers Inc. (NYSE: TOL) didn’t make a big pop on earnings, it broke out of a resistance level and is set to continue climbing from here.
Chewy Inc. (NYSE: CHWY) is headed in the opposite direction. Earnings caused a breakout to the downside of the triangle pattern the stock was trading in. Remember, this one had room to the upside for a bounce that would have kept it in the price pattern. Instead, the stock fell last week and is now signaling a greater drop from here.
Today, we look at two under-the-radar companies set for another make-or-break week on earnings: ABM Industries Inc. (NYSE: ABM) and Trip.com Group Ltd. (Nasdaq: TCOM).
Earnings Edge Stock No. 1: ABM Industries Inc. (NYSE: ABM)
Earnings Announcement Date: Wednesday, before the open.
Expectations: Earnings at $0.81 per share. Revenue at $1.6 billion.
Average Analyst Rating: Outperform.
ABM Industries has been around for decades, even though it’s not a widely discussed company. That’s because it doesn’t do anything exciting.
It’s a janitorial and custodial company for corporations around the world.
By focusing on all the maintenance-type businesses that corporations needed and looked to outsource, it’s been a pretty solid stock over the years.
Nice and steady would be one way to put it when you look way back. ABM was under $10 a share in the mid-90s and is now teasing the $50 price level.
Since shares hit a new all-time high back in March, though, ABM has consolidated into a simple wedge pattern.
ABM’s Consolidation
With a falling resistance level in red and arising support line in green, a breakout is getting closer and closer for this pattern. Earnings always create the potential for a big move for any stock and could easily trigger a breakout this week.
That’s why we are looking at the stock today.
Options traders are pricing in a 4.5% move, which may not even be enough to trigger a breakout. But earnings are all about surprises, and if we get a move bigger than that, we likely have a breakout on our hands with a clear path ahead for the stock.
From its long and storied trading history, it’s not one I’d look to bet against. At least not until that green support level is broken.
Earnings Edge Stock No. 2: Trip.com Group Ltd. (Nasdaq: TCOM)
Earnings Announcement Date: Wednesday, after the close.
Expectations: Earnings at $0.08 per share. Revenue at $5.2 billion.
Average Analyst Rating: Outperform.
Trip.com is a travel platform based in China. Much like Expedia here in the states, Trip.com helps people book hotels, planes and other travel arrangements online.
This industry was in a strong rebound since the pandemic stopped all travel, but TCOM peaked in March of this year. Since then, the stock plunged nearly 40%.
That has helped create an extremely wide wedge pattern for the stock.
TCOM Has Been Volatile
You can see how high and steep the resistance level is, from $44 down to the $20 level today. Then there’s the strong support that is closing in on it.
With a pattern this wide, it tells me one thing: Expect more volatility. And traders love a stock with volatility.
It is already swinging everywhere, seeing quick double-digit moves to the downside, and some bounces are just as sharp.
Overall, TCOM has trended lower in 2021, but now we have a wedge pattern nearing a breaking point. Anything can happen from here.
Let’s see if this volatile stock gets a move on earnings that triggers a breakout.
Regards,
Chad Shoop
Editor, Quick Hit Profits
Click here to join True Options Masters.
