We are still in the thick of earnings season this week.
And so far, it hasn’t disappointed.
There have been some wild, sharp moves on earnings, which is what we love to see.
Avis Budget Group (NYSE: CAR), the rental car giant, may be the biggest shocker. It wasn’t all about earnings — the short-squeeze played a huge part in it. But the stock literally doubled after earnings.
This showed us two things:
- Meme stocks are still in play after sitting idle for about six months now.
- Earnings can still make or break the bank.
So we’ll continue looking for stocks set for big moves each week.
Our two companies from last week didn’t break out just yet.
Exact Sciences Corp. (Nasdaq: EXAS) fell over 8% on earnings and initially broke below the key support we were watching. But, shares climbed higher during the day and closed right at it.
It was nice to see a weak earnings report not cause a full-blown downside breakout. But it’s too soon to turn all-out bullish on the stock. If it fails to hold above $91 a share, expect it to continue trending lower.
NortonLifeLock Inc. (Nasdaq: NLOK) didn’t do much on earnings. Shares were lower heading into earnings, then rose, but overall, NLOK looks to still be in a wedge pattern. For now, there’s no clear way to trade it.
Not every stock is going to give us the action we are looking for, but the two companies we’re covering today are setting up for big moves this week.
Earnings Edge Stock No. 1: Coinbase Global Inc. (Nasdaq: COIN)
Earnings Announcement Date: Tuesday, after the close.
Expectations: Earnings at $1.72 per share. Revenue at $1.5 billion.
Average Analyst Rating: Outperform.
Coinbase Global Inc. (Nasdaq: COIN), a cryptocurrency trading platform, wants to make crypto trading mainstream.
It’s been making moves lately.
It’s letting users borrow up to $1 million using their Bitcoin as collateral. Coinbase is also trying out a subscription service for customers that would include waiving some trading fees. It also recently acquired an Indian AI start-up customer service company.
When we take a look at the stock, investors like these moves.
COIN is up 50% in the month of October but still well below its highs from the IPO in April, around $420 per share.
COIN Is Trending Higher
Source: Optuma.
The October swing higher pushed the stock beyond the green line on the chart. Since May, that was a key level of resistance. But it broke above that two weeks ago and has been steadily climbing since then.
You can bet that earnings this week are going to be on everyone’s radar.
With a young stock like this, earnings carry more weight since there’s still much to learn about the company.
Analysts are pricing in a 5% move, or about $20 per share this week. That could mean COIN pulls back to that green support, or it could lead to more gains ahead.
Either way, this is a pivotal earnings report for COIN. As long as it holds above that green line, you can be bullish on Coinbase.
Earnings Edge Stock No. 2: Points International Ltd. (Nasdaq: PCOM)
Earnings Announcement Date: Wednesday, after the close.
Expectations: Earnings at $0.06 per share. Revenue at $95 million.
Average Analyst Rating: Buy.
The company responsible for managing many of the loyalty programs around the globe, Points International Ltd. (Nasdaq: PCOM), is trading in a pattern that breeds breakouts.
It’s a simple wedge pattern that shows the stock has been coiling up for over a month now.
And when one of these key levels break, a massive price move will be on the way.
PCOM Just Needs a Spark
Source: Optuma.
Since the support, in green, has lasted much longer than the resistance, I’m bullish on PCOM heading into earnings.
It won’t take a whole heck of a lot to get a breakout either. PCOM is just 7% from the top to the bottom of the current band on the wedge pattern.
Traders are pricing in an 8.5% move over the next two weeks, so they are counting on a breakout. And what better time to have a breakout than on earnings. Look for a big move from the stock this week, and I’m betting shares rise from here.
Chad Shoop is an options expert for Banyan Hill Publishing. He is the editor of three leading newsletters: Quick Hit Profits, Automatic Profits Alert and Pure Income. His content is frequently published on Investopedia and Seeking Alpha. Check out his YouTube Channel to see his latest market insights.
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