Take Advantage of Earnings With 2 Momentum Stocks (CALM & SAIC)
Our two Earnings Edge stocks from last week didn’t break out after their quarterly calls. Both Ollie’s Bargain Outlet and Mister Car Wash are still stuck in downward wedge patterns.
So today, we’ll switch it up by looking at a pair of stocks that could soar off earnings.
Earnings Edge Stock No. 1: Cal-Maine Foods Inc. (Nasdaq: CALM)
Earnings Announcement Date: Tuesday, after the close.
Expectations: Earnings at $0.83 per share. Revenue at $468 million.
Average Analyst Rating: Hold.
CALM is a publicly traded egg company and, in today’s environment, a leading stock. With inflation surging and food shortages on the way, Cal-Maine earnings are skyrocketing.
Investors pushed the stock up 35% in the first three months of 2022!
CALM’s Shortage Driven Surge
There’s a wide megaphone pattern in the works, but if we get a dip on earnings, I’d buy in. It’s best to wait and see how the market reacts, since bullish sentiments are already priced into CALM.
Options traders are only betting on a 5% move from now until April, bringing back an option straddle into play.
With a 5% move expected, this stock could easily swing more than 10% this week, allowing you to exit at profitability.
But since the options don’t expire until April 14, you’ll be able to ride it even further in the direction of earnings.
Remember to use the same strike and expiration, but buy both a call and a put for a straddle trade.
Earnings Edge Stock No. 2: Science Applications International Corp. (NYSE: SAIC)
Earnings Announcement Date: Wednesday, after the close.
Expectations: Earnings at $1.22 per share. Revenue at $1.7 billion.
Average Analyst Rating: Outperform.
SAIC, an IT company, is nowhere near as hot this year as the egg production company, but things may change.
The stock has been trading in a descending triangle pattern for over a year now.
SAIC’s Descending Triangle Finally Broke
The green support held up, but the stock broke through the red resistance line at the start of the month. That price level was tested over the next two weeks before shares began moving higher again.
With earnings this week, SAIC is set to make a continued run to the upside throughout 2022.
The options market is only pricing in a 3.7% move by April 14, so SAIC is another candidate for a straddle trade to profit from a bigger-than-expected move.
But, considering the price chart and the recent breakout, I like being bullish on the stock heading into earnings, as long as it stays above the red resistance level following any weakness.
Editor, Quick Hit Profits
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Investing has consumed my life since college. While double majoring in finance and economics at the University of North Carolina at Greensboro, I founded the university’s economics club, joined the finance club and participated in the Chartered Financial Analyst research competition to represent our school.