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  • How to Exploit Earnings InefficienciesMaking money after the post-Brexit rally is tough.
  • Earnings are the great equalizer—investors can digest operating results and forecasts in order to reprice stocks based on actual facts.
  • Sometimes the market gets it wrong when it comes to earnings—that’s when you should make a move.

Eyeing a high-priced stock to add to your portfolio? Post-earnings mistakes are your opportunity to pounce.

It’s hard making money in the market—especially after an impressive post-Brexit rally.

What’s an investor to do with fewer and fewer opportunities? Target and exploit earnings inefficiencies.

I always say that earnings are the great equalizer. Every quarter investors can digest operating results and forecasts in order to reprice stocks based on actual facts.

All else is mere speculation. And guess what? Speculation gets it wrong.

The big moves in share price after earnings are released shows just how wrong the market gets it. Sometimes the market even gets it wrong before results are released. It’s in those moments that investors and traders should pounce.

With valuations stretched, these moments create real opportunity for big gains.

The most recent case: The Tile Shop (NASDAQ:TTS).

How to Exploit Earnings InefficienciesShares of the tile retailer sank nearly 10% on Tuesday after reporting earnings that by all accounts was stellar. The company beat earnings estimates by a penny per share, continuing a trend of upside surprises and validating the 2016 run-up in share price.

On the revenue side the numbers came in a fraction below expectations. That’s nothing to be overly concerned about. The company is in an elite crowd that impressively grows business in this challenging economy.

So what’s the problem?

On the surface it would look like a little profit-taking. The Tile Shop is up big in 2016, significantly above the market.

The numbers, while impressive, weren’t spectacular, making for an easy excuse to sell shares. Big mistake, if you ask me.

The door is now wide open for exploitation.

Here’s what you need to know…

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