Sunday, June 17, 2012

Identifying Earnings Season Overreaction Opportunities

AAII has some screens for stocks with pleasant earning surprises and bad earning surprises. The pleasant ones always beat the other ones in a year from the last time I checked.

My own experience. I enjoy the negative surprises better. If they do have a reason for come back, I invest esp. on those that have been beaten up badly by the big boys. Sometimes it takes a month and sometimes even a year for the stock to come back.

Missing expected earning by 1% and causing the stock to drop by 10% is a buy to me. Heading to bankruptcy is a different story though.

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