Scalper1 News
A construction worker who walks the narrow beams of skyscrapers under construction was once asked what he did when the wind started blowing. “That’s not a problem,” he said. “The problem is when the wind quits blowing, and you get caught leaning.” The stock market is in that situation now. Headwinds forced investors to lean to the defensive side. Just look at the defensive stocks that dominate the top 20 industry groups. Yet that could be changing with Tuesday’s follow-through day. There are only two ways for this story to go. The stock market could deliver a head fake and then get worse, leaving defensive stocks to gain a little, stand pat or at least lose less than the market. Under that scenario, cash would be the safest defense. The other path is that the confirmed uptrend works, which would kick aside the defensive names and define a new cast of winners. Where would the new winners come from? Given the incomplete chart patterns of many top-rated stocks, the answer might take a while to arrive. One place to look for potential leadership is in the growth-oriented groups that have kept a place among the top industry groups. If those stocks can stay respectably close to the top in a market correction, it’s reasonable to assume that they might complete bases and then take off in a strong market. The Internet retail and Internet content industry groups are both hanging tough in this market. They’ve slipped some in the rankings; but going into Tuesday’s session, both remained in the top 20. Within the group, the best candidates for leadership are probably those with the strongest earnings outlook. So let’s look at the companies that are expected to grow earnings faster this year than last year. (Included are companies that expect to deliver big growth this year after turning from losses to gains in 2015.) In the retail side, Amazon.com ( AMZN ) lost 52 cents a share in 2014 but is expected to post a profit of $1.86 a share when it reports 2015 results Thursday after the close. In 2016, the Street expects Amazon to grow earnings 198% to $5.54 a share. Alibaba ( BABA ) is expected to grow earnings 12% in fiscal 2016 ending in March. For the following year, the Street sees a 28% gain in earnings for the China-based e-commerce company. In the Internet content group, Facebook ( FB ) is expected to report 2015 results after Wednesday’s close. The Street expects 23% EPS growth and then 33% growth in 2016. Analysts estimate LinkedIn ( LNKD ) will chalk up 33% EPS growth when it reports 2015 results Feb. 4 after the close. For 2016, earnings are expected to grow 37%. Alphabet ( GOOGL ) reports after the close Feb. 1. The Street expects 14% growth in 2015 and 18% growth in 2016. Scalper1 News
Scalper1 News