As per your request I repost a similar comment to the one I posted on the STT during this week.
This relates to the weekend topic around the profit reporting season.
This is how I attempt to make some money during this time.
I have a set watchlist of companies on my watchlist that I follow on a FA basis.
I use multiple sources to determine when companies are due to report earnings.
I will closely follow share prices for up to 6 weeks prior to report. If I see prices at a level that I think represents value I will buy and hold til after report.
If not held I will research the day before they are due to report and try to determine whether I think they can outperform any guidance or broker opinions. This research may involve reading the last report, reading any announcements relating to updated guidance, business updates, acquisitions etc.
If I believe the result will lead to a reasonable in increase in price I will purchase shares to hold in to the result.
Reports from companies in the same sector can also help with opinion. For instance FAN (furniture retailer) upgraded guidance prior to report. Since then Nick Scali (NCK) reported and the price has gone up 10-15%. ADH is on my research list this week. Each of these stocks are a little illiquid though.
Here are a couple of examples (not trying to blow my own trumpet).
My favourite was from the February reporting season. Domino's (DMP) had pulled back from about $56 to $52. They have an unblemished record on beating expectations. I purchased about 10 minutes before closing on the Tuesday at $52.14. I was down to play golf in my local Wednesday Comp the following morning, so I put in a sell order at $57.
The result came out and the shares opened at $61 (hence the price I received for my shares).
In summary I held from 3.50 pm to 10.00 the next morning and made nearly $9 per share.
On Thursday just gone I purchased BBN at 2.85 before the report on Friday. The result was well received with the price up over 10% at one stage on Friday. I sold during the morning for a nice profit.
This approach does not work every time but I do not attempt it on every result.
I sometimes also use a similar theory when tech companies report their quarterly 4C results. The market loves to see growing revenue and this I what I focus on my research on.
Mining stock followers could view it similarly to buying a stock prior to releasing of drilling results. If you have done your research you will have a reasonable idea of whether they are likely to impress or not.
I hope some of you find this post helpful, sorry for the length of it.
