It’s still the early stages for earnings season. But we’ve seen companies perform above expectations, even as overall performance has started to slow in the past year. With some big tech names about to report, now may be the time to look at adding these stocks.
While they’ve typically been growth names, in a market slowdown, smaller companies may not be able to grow. And the big established names could end up with a larger market share as a result.
One company reporting later this week is Amazon (AMZN). The retailer doesn’t always make money, but it does focus on growing in size overall. This quarter, it’s looking to have sales between $116 to $121 billion, and is expected to post net earnings of just 15 cents per share.
While shares are up recently, they’re still down about one-third over the past year. The stock has gone from about 4.2 times price to sales in the past year to 2.5 times today, its best valuation in years.
Action to take: Shares look attractive as a long-term bet, even ahead of earnings. Buyers may want to start a partial state now in case shares take off after earnings, with some capital set aside to buy more on a possible drop. The stock does not currently pay a dividend.
For traders, the January $150 calls, last going for about $5.10, offer mid-to-high double-digit returns on any sizeable rally in the back half of the year. As with buying shares now, consider buying a partial stake before earnings.
Disclosure: The author of this article has a position in the company mentioned here, but does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.