What is the stock picker’s definition of heaven?
Here’s exactly how we achieved it, and how you can do the same…
The stock picker’s definition of heaven is making a bullish call on a stock, then seeing that stock spike higher on a divine earnings beat.
While many expected FB to come in with a solid beat, no-one expected that the company would have such an outstanding quarter that included revenues of $5.8 billion vs. estimates for $5.4 billion and EPS of 79 cents per share vs. estimates for 69 cents.
The social media giant also showed a big increase in daily active users (up 17% year-over-year to 1 billion) and monthly active users (up 14% year-over-year to 1.6 billion).
Perhaps most importantly, the company continues to see huge advertising growth, and now counts than 2.5 million advertisers on Facebook alone—and that doesn’t even include its fast-growing Instagram advertising operation.
The day after the earnings news hit Wall Street, FB shares spiked 15.5%.
The earnings growth by FB last quarter, as well as over the past several years, has put it among the market’s most elite earnings powers, which has allowed the stock to capture an EPS rating of 98 (better than 98% of all other publicly traded companies).
That growth has been rewarded with a RS rating, or relative price strength rating, of 96. That means the shares have outperformed 96% of all other public companies over the past 52 weeks.
These strong ratings, along with the positive news flow, or what I call “NewsQ,” lead me to suspect there would be a strong Q4 for Facebook. That assessment helped me put it on the Next Week’s Winners buy list in early January, even as the broad market crumbled all around us.
Subscribers to my service now hold FB shares with a gain of nearly 11% and climbing… while those who own the broader NASDAQ 100 stocks, or Qs, are staring at a loss of more than 8% over the same time period.
That’s the power of strong fundamentals; strong share price performance and positive NewsQ—and those are the key factors fueling the selection criteria in the Next Week’s Winners advisory service.