The widely followed Nasdaq-100 index is up 13 of the last 14 weeks, a huge move that dates back to Halloween. Booming artificial intelligence plays and hopes of multiple Fed rate cuts this year have propelled the tech-oriented benchmark to record highs. Although the Nasdaq’s price-to-earnings (P/E) ratio has swelled above 30x in the process (from 24x a year ago), traders continue to bid up its constituents and buy any semblance of a dip.
A major catalyst in recent days has been corporate earnings reports. Strong fourth quarter performances and outlooks from several Nasdaq-100 companies have been commonplace. Amazon.com and Meta Platforms have produced some of the biggest fireworks. Even some non-tech names like industrial machinery provider Paccar and snack maker Mondelez International are getting in on the action. In a couple of weeks, we’ll find out if NVIDIA’s release can keep the Nasdaq-100 rally alive.
Fortunately for traders, the fun may be far from over.
More than half of Nasdaq-100 companies have yet to report their fourth quarter numbers. This leaves plenty of opportunity to capitalize on short-term swings tied to upcoming conference calls. But with over 50 CEOs stepping to the podium over the next 30 days, how can this watch list be managed?
One approach is to focus on stocks that have historically had the biggest post-earnings reactions. Sifting through stock charts can reveal big movers — but there’s a more efficient way. Volatility data points like beta and standard deviation tell how wildly a stock swings relative to the market or its own history, respectively. Adding these to a list and sorting can be a quick way to see the high risk candidates.
Here are a few examples of high beta, high standard deviation Nasdaq-100 stocks that are poised to have volatile earnings moves in the near future.
When does DexCom report?
DexCom, Inc. (NASDAQ: DXCM) will announce 2023 fourth-quarter earnings after the closing bell on Thursday, February 8th. The continuous glucose monitoring systems (CGM) specialist is expected to report earnings per share (EPS) of $0.43, which represents a 26% growth from the prior year. It has beaten Wall Street’s EPS estimates for five straight quarters, including a resounding beat last time.
Due to increased global awareness of the benefits of real-time CGM devices, third-quarter EPS came in at $0.50, trouncing the Street’s $0.34 estimate. The stock gapped up 10% in more than three times normal volume and hasn’t looked back since. DXCM is up more than 50% from its October 2023 low, but its chart suggests more gains are ahead. A recent ‘life cross’ points to a long-term uptrend — and makes the recent pullback from $132.40 an attractive pre-earnings entry point.
Will DoorDash beat consensus Q4 earnings?
DoorDash, Inc. (NYSE: DASH) has been one of the most exciting Nasdaq stocks to trade over the past year. After missing 2022 fourth-quarter earnings by a country mile, the delivery service platform has topped analyst EPS expectations in two of the last three quarters. A much narrower-than-expected third-quarter loss tied to strong order volumes caused the stock to gap up 16% on November 2nd.
It has since trended upward, with the market anticipating another strong report and a profitable quarter in the second half of 2024. DoorDash is seeing its monthly active user (MAU) base rise and getting significant contributions from advertising. During the fourth quarter, it added Best Buy to its marketplace along with grocery chains Save Mart, Lucky and Food Maxx. Last month, Camping World, Golf Galaxy and The Vitamin Shoppe signed on as on-demand delivery customers.
Is MELI a good earnings play?
As one of the Nasdaq-100’s most volatile components, MercadoLibre (NASDAQ: MELI) has been known to deliver some post-earnings fireworks. The ‘Amazon of Latin America’ has surpassed Street EPS forecasts for seven consecutive quarters. In the process, its stock has tripled off its 2022 low and appears destined to challenge its $2,020.00 all-time peak.
MercadoLibre is experiencing growth in all three of its core markets — Brazil, Argentina and Mexico — as well as in other international markets. Both fintech and credit revenue are up significantly from last year as a result of new product and technology launches as well as geographic expansion. The company, which has built its active user base to 120 million, announced that it experienced record Black Friday sales with particular strength in its biggest market of Brazil. Look for this to translate to a ‘fuerte’ (strong) Q4 earnings report on February 22nd.
