AFRICANEWSWIRE.NET (August, 18 2012) In a recent Penny Stock Detectives echnology-stocks-still-pop-with-an-earnings-surprise">article, editor Mitchell Clark points out that if earnings numbers beat with conviction, you can trade off earnings news. Clark notes that there’s good movement in smaller-cap technology stocks, and while large-cap technology stocks aren’t moving that much this earnings season, small-cap technology stocks are and they’re outperforming.
Clark uses Rudolph Technologies as a prime example: “Here’s a great, event-driven trade that just happened when the broader market was flat,” he says. “…The company’s second-quarter earnings were a total surprise, as its results beat the Street on strong product demand.”
Rudolph Technologies is a company that’s been around a while, selling highly technical solutions that help with quality control in the manufacture of semiconductors and data storage equipment, explains Clark.
According to the company, its 2012 second-quarter revenues grew to $56.3 million, representing a 23% increase over revenues of $45.7 million generated in the 2012 first quarter. Generally accepted accounting principles (GAAP) earnings in the second quarter were $6.3 million, or $0.19 per diluted share, compared with earnings of $1.9 million, or $0.06 per diluted share, beating consensus by $0.05 a share, Clark reports.
The stock opened up just under $10.00 a share, and then sold off a bit on some profit taking. Then the position spiked to over $10.75 a share before falling back to $10.00, notes Clark.
“This was one of those technology stocks that you could have day traded, even after the position opened higher on better than expected second-quarter earnings,” he says
According to the Penny Stock Detectives editor, as a group, technology stocks are attractive for event-driven trades. But for longer-term investing, growth rates are no longer guaranteed to be double-digit, so investors might be better off with a large-cap, dividend paying brand name, over trying to bet on a company’s business cycle in this economy, believes Clark. In his opinion, for event-driven trades, institutional investors will still move big in technology stocks if the news is good enough.
“A major earnings surprise is still a big deal in a lackluster market,” Clark says.
For the first time in a number of quarters, this earnings season revealed the slowdown in top- and bottom-line growth, observes Clark. The outlook for technology stocks for the rest of this year is modest at best, he argues, although the NASDAQ has shown a lot of resilience over the last several years. Looking at the stock market today, Clark says it’s fairly valued considering the earnings.
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