Stocks hitting new highs following earnings

 

The earnings season is winding down, and generally speaking it has been a rather positive one. As is always the case, we have seen some big disappointments, but the overall theme has been positive, and a lot of big name stocks have surged to new highs following their quarterly reports.

Wall Street loves to see companies post better than expected numbers, but what really drives stocks following their reports is growth. The market loves growth since it illustrates a company’s ability to navigate current market conditions, and allows for shares to move higher while maintaining their current valuation.

Earnings season can be a volatile time, but if you are lucky enough to have the right stocks in your portfolio is can be a time of big gains. This week we want to take a look at five stocks that not only hit new highs following their quarterly reports, but are showing strong enough growth to warrant shares building on their recent gains.

Apple

iPhone maker Apple (AAPL) reported its fiscal third-quarter numbers on July 31, and the stock instantly gapped higher to a new record high. APPL has become the first publicly traded company to reach a $1 trillion valuation, and as the company continues to grow earnings the stock still has a lot of upside potential. The smartphone market has become fairly saturated, and while actual units sold are weakening, Apple has continued to raise the average price of the phones sold, keeping momentum under the stock as the company works on growing its other revenue streams. Earnings were up 40% year over year, and analysts expect the company to grow its earnings by an average 12.8% a year over the next five years.

Chart courtesy of stockcharts.com

Advance Auto Parts

Auto parts retailer Advance Auto Parts (AAP) gapped higher to a new 52-week high following its August 14 earnings report. The company posted earnings of $1.97 per share, which easily outpaced the $1.85 estimate, and were up 24.6% versus the same period last year. Bottom line numbers were better than expected as well, with sales rising 3% year over year. AAP gapped up sharply on the better than expected numbers. After such a strong set of numbers, analysts will likely rush in and boost their price target on the stock which allow shares to move even higher.

Chart courtesy of stockcharts.com

Aetna

Insurance provider Aetna (AET) is currently trading just shy of its all-time high after the company posted better than expected Q2 earnings on August 2. Aetna posted earnings of $3.43 which shattered the $3.04 consensus, while sales come in just shy of estimates. The market overlooked the small sales miss and pushed shares higher. AET currently trades at $196.77, just pennies below its all-time high of $196.97. Analysts have a $202.75 average price target on the stock, but estimates are likely to rise following the earnings beat to allow shares to build on recent gains.

Chart courtesy of stockcharts.com

Square

Payment processor Square (SQ) stock shot higher to a new all-time high after the company posted better than expected top and bottom line Q2 numbers on August 1. Earnings were up 85% year over year, while the company’s total net revenue jumped 48%. The stock gapped higher, and is currently trading at $74.47 versus an all-time high of $74.90. Looking ahead, the company forecast sales for the current period would be up in a range of 58% to 60% year over year. It also forecast a loss of $0.17 to $0.21 for the full year, narrower than its previous $0.24 to $0.28 range.

Chart courtesy of stockcharts.com

Wolverine World Wide

Wolverine World Wide Inc. (WWW) manufactures footwear and accessories, and the company posted mixed second-quarter numbers August 8. Earnings easily topped estimates, while sales for the quarter were just slightly below the consensus $568.8 million at $$566.9 million. Earnings were up 25.5% to $0.54 per share, exceeding the $0.46 estimate. WWW has enjoyed steady gains over the last two years, and the stock is currently trading at $37.97 with an all-time high of $38.21. Analysts have a $38.56 average price target on the stock but are likely to boost their targets following the recent earnings beat.

Chart courtesy of stockcharts.com

Symbols: AAP AAPL AET SQ WWW
Michael Fowlkes

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.

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