10 Unfairly Punished Stocks I'm Watching With Earnings on the Horizon
I believe there is a good chance they will recover when management states that fundamentals are unchanged and they are progressing well.
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After three days of selling high P/E momentum stocks, we have some snapback action on Wednesday. Breadth is running better than 2 to 1 positive, and the Innovator IBD 50 ETF FFTY has bounced back 4% after a shellacking of almost 20%. The Magnificent Seven MAGS is up 1%, and the Russell 2000 IWM is leading the indexes with a 1% recovery.
Buyers are obviously hopeful that the worst is over and stocks will go straight back up from here, but the most important issue is that there are very important support levels at the lows that were hit on Tuesday. Ideally, stocks will form support above that level, which will serve as a foundation for a move higher. If those lows do not hold, that will suggest that a more severe downtrend is developing, and there will likely be a rush for the exits if there is a lower low.
Another important issue after the recent ugly action is that market players will now focus more on stock picking as they try to determine which names are the most likely to recover. Many stocks were bashed purely on valuation concerns, and those shares aren’t as likely to come back as fast as names that were knocked down simply because they were in indexes or ETFs that were being sold.
Many good stocks have been unfairly punished in the last few days because traders have lately been selling first and asking questions. The good ones should find buyers, but it is a process that takes time.
I’ve done a little buying of a few names that have earnings reports coming up. Since these names were knocked down on nothing company-specific, I believe there is a good chance they will recover when management states that fundamentals are unchanged and they are progressing well.
A few names I’m watching with earnings in the next 10 days or so are Xeris Biopharma XERS, Mirum Pharmaceuticals MIRM, uniQure QURE, ClearPoint Neuro CLPT, AST SpaceMobile ASTS, GitLab GTLB, Rocket Pharmaceuticals RCKT, Emergent BioSolutions EBS, ADMA Biologics ADMA, and Delcath Systems DCTH.
Earnings reports are always risky, but after the recent action, most of these stocks have priced in bad news that may not occur.
At the time of publication, Rev Shark was long XERS, MIRM, QURE, CLPT, ASTS, GTLB, RCKT, EBS, ADMA and DCTH.
