Stocks to watch the week of Nov. 3, 2014: Of the nearly 350 components in the S&P 500 Index that have reported Q3 earnings, better than three out of four (76%) have topped estimates.
That puts Q3 2014 on pace for the third best quarter in the last three decades, according to Thomson Reuters. Q3 2009 sports the best beat rate with 79% trumping estimates, while Q1 2010 is second with a 78% beat rate.
This week brings numbers from some 150 S&P 500 Index members. Following are a few key stocks to watch as they report earnings this week.
Hot Stocks to Watch Now
Hot Stocks to Watch No. 1: Herbalife Ltd. (NYSE: HLF) reports Q3 results after Monday's closing bell. Analysts expect earnings per share (EPS) of $1.51. Whisper numbers are for EPS of $1.52. The Federal Trade Commission (FTC) has been investigating since March whether the nutritional supplement outfit operated as an illegal "pyramid scheme."
The question is whether its sales were largely derived from attracting people to distribute its product, rather than actual sales to customers. The FTC action followed claims by famed activist investor and short seller Bill Ackman, who says the company's business model violates a host of federal and state laws, and that the government should shut down Herbalife. Of interest to shareholders, as well as earnings and revenue numbers, will be how many new recruits HLF signed on and the size of its network distributors - which has been stalling. Shares are down a punishing 35% year to date. Get the full HLF story here - it's one of the most scandalous on Wall Street today.
Hot Stocks to Watch No. 2: Alibaba Group Holding Inc. (NYSE: BABA) will release Q3 results before Tuesday's market open. Wall Street is looking for the Chinese e-commerce behemoth to post EPS of $0.47. Whisper numbers are for EPS of $0.57. BABA went public on Sept. 19 in the most highly anticipated initial public offering of the year. Shares surged 38% to just under $94 in its debut, making Alibaba the fourth most valuable technology company in the world behind only Apple Inc. (Nasdaq: AAPL), Microsoft Corp. (Nasdaq: MSFT), and Google Inc. (Nasdaq: GOOGL). Five of the six banks that acted as lead underwriters came out last week with "Buy" or "Overweight" ratings. However, short sellers are betting the stock will fall and have bulked positions ahead of the release, according to data from Astec Analytics. Short interest more than doubled to 17 million as of Oct. 28, up from 8 million at the end of September as shares hit an all-time high of $100.67 last week. Money Morning has detailed the long-term value of BABA stock - go here to get caught up.
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Hot Stocks to Watch No. 3: Chiquita Brands Intl. Inc. (NYSE: CQB) reports Q3 results before Wednesday's open. Forecasts have the banana king posting an EPS loss of $0.09. Whisper numbers are for a much larger EPS loss of $0.15. Late last month, the Charlotte, N.C.-based company called off a merger with Ireland-based Fyffes Plc. and decided to be taken over by Brazilian duo Cutrale/Safra in a twice sweetened $14.50 bid. Shares are up an appealing 23.16% year to date.
Hot Stocks to Watch No. 4: CBS Corp. (NYSE: CBS) will post Q3 results after Wednesday's closing bell. Expectations are for EPS of $0.74. CBS handily beat EPS expectations of $0.72 in Q2 and $0.75 in Q1 by $0.06 and $0.03 respectively. However, RBC cut its earnings estimates for CBS last week citing lower-than-expected ratings for "NFL Thursday Night Football." The mean analyst recommendation on CBS is "Buy," according to Zacks. Shares are down 15.28% year to date.
Hot Stocks to Watch No. 5: AOL Inc. (NYSE: AOL) will release earnings Thursday before the open. Forecasts have the leading Internet site posting EPS of $0.52. Whisper numbers are for EPS of $0.55. Last month, Chief Executive Officer Tim Armstrong squashed rumors that AOL was mulling a merger with Yahoo! Inc. (Nasdaq: YHOO). Instead, Armstrong said AOL will focus on growing ad revenue and partnerships in 2015, adding the company is in talks to spin off CrunchBase, the tech company database it purchased in 2010. Evercore Partners recently upgraded the stock to "Buy" from "Hold," with a $48 price target. At $45.97, shares are up nearly 14% year to date
Hot Stocks to Watch No. 6: Sarepta Therapeutics Inc. (Nasdaq: SRPT) releases Q3 results Thursday morning. Analysts are looking for the biotech company to post an EPS loss of $0.96. Shares got a boost in August and early last month when the company said it has an Ebola "drug that could be deployed and shipped." And shares surged 60% to $40 in April on news SRPT planned to submit a New Drug Application to the U.S. Food and Drug Administration by the end of 2014 for the approval of its lead drug candidate, eteplirsen, for the treatment of Duchenne muscular dystrophy. Shares were clipped 31% late last month when SRPT announced the FDA wants more information on eteplirsen. Downgrades followed and rumors swirled the company is running out of cash. At $16.39, shares are down 20.86% year to date.
Hot Stocks to Watch No. 7: Humana Inc. (NYSE: HUM) will report Q3 numbers Friday morning. Forecasts are for EPS of $2.01. Whisper numbers are for EPS of $2.12. Revenue is seen rising 20% to $12.4 billion. Humana, like other managed healthcare providers, has benefited from expanding its Medicaid program under the Affordable Care Act (Obamacare.) Late last month, Reuters reported Humana hired Goldman Sachs to explore the potential sale of its urgent care unit Concentra, which could fetch as much as $1 billion. HUM shares are up 35% year to date.
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