Three Earnings Plays

Basically there are three potential earnings plays that I like today, but I am only going to act on one. Well start with Paychecks (PAYX). PAYX, quoted at 39.50, is slightly off its 52 week high of 42.50. Earnings Whispers says the company will beat the estimated earnings number of $.35 by a penny. Paychecks has beat the estimate four out of the last five quarters and the one time it missed the stock actually moved up. This appears to be a good play for a safe investor. I do not think the stock will move much more than 2% either way on the news, unless the actual earnings are significantly different.

A more riskier earnings play is Smart Modular Technologies (SMOD). SMOD is well off its 52 week high and has recently had significant trend downward. The stock has beaten estimates three out of the last four quarters, but moved up significantly after the one miss. Earnings Whispers feels that SMOD will beat the estimates by a penny, but if SMOD keeps up is historical trend of beating estimates, one could expect another penny higher. Investors should be cautious of this stock because of the volatility around earnings. SMOD has averaged a 5.05% price fluctuation after the release. Personally, I am going to stay away from this one.

I am going to play CarMax (KMX). This stock is slightly off its 52 week high and needs the proper catalyst to break through that technical barrier. I think an earnings beat could be the answer. CarMax has smoked estimates five quarters in a row, beating the consensus expectations by an average of 25.58%. The stock moves around 4% each earnings release, which I can afford to lose. The Earnings Whisper number is $.47 compared to $.21 cents a share, signifying a potentially mammoth beat.

I set my limit for $27.35; see you at $30 tomorrow!