You Don't Have to Wait for Earnings Season to Make Money on Earnings

Sid Riggs

We all know that, more than anything else, earnings drive share prices. And anyone can see the impact of an "earnings beat" on a company's stock.

Just look at the way the financial media will dissect the information and report the highlights – sometimes to the point of redundancy.

That's fine, but there's another earnings event – one far off the media's radar – that is much more powerful, like a "spark" that can ignite massive gains for those who know how to spot it.

That's why I want to show you how to find it today. It'll help you make more money, but you'll also get into position ahead of Wall Street's biggest investors.

This "Spark" Can Ignite Massive Gains

Like I said, earnings season grabs financial headlines, but analysts' upward earnings revisions just don't get much press.

That's mostly because earnings revisions aren't as sexy as when a company like Apple Inc. (Nasdaq: AAPL) blows the doors off expectations.

They can also happen at any time.

Let me show you how analysts come by these numbers, in case you're not familiar with them.

An analyst identifies a catalyst that has yet to be priced into the market. These catalysts could be any one or a combination of improving trends in recent earnings, or upbeat management comments to the public, or the announcement of a key contract or new technology, or an improvement in the macro-economic condition of an entire industry, just to name a few.

Once the analyst identifies the catalysts, he can go to work crunching the numbers in order to come up with new projected earnings and price targets.

Now, it doesn't really matter why the estimate was revised – as long as it's logical and supports well the contention that the potential for future profits is greater than it was before.

Once the estimate is revised, the analyst puts together a report – complete with the rationale behind the improved estimates – and sends it out to institutional investors and preferred clients.

The new estimate is added to the existing group of estimates, and an average consensus estimate is generated.

When the consensus estimates are improving, it indicates analysts are expecting earnings to improve – and that catches the eye of institutional investors (or the "Big Boys," as I like to refer to them) who have literally trillions of dollars to invest.

This is where the fun starts…

Sid Riggs

About the Author

Browse Sid's articles | View Sid's research services

Sid is the investment community's best-kept secret. Since 2009, he's served at Money Map Press as Director of Research, analyzing thousands of securities and profit opportunities for subscribers. He's an expert in identifying "alpha" potential in a wide variety of industries, but especially the small-cap sector, where he's discovered a pattern of profits that's almost foolproof.

… Read full bio