The Profit Column: A Rare Earnings Report Convergence

By TradeSmith Research Team

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This week, we’re staring down the most critically important earnings season since… well, to be frank, last earnings season.

The mainstream financial media produces a lot of bombast each quarter. And I get why — it’s an exciting moment.

A cluster of companies across the business spectrum are set to make or break their stock’s share prices with just a few words… It’s enough to put anyone on edge.

More importantly, anyone who’s spent a lick of time in the markets knows earnings reports can produce phenomenal trading gains in a short amount of time. And no one is better qualified to testify to this more than Andy and Landon Swan, founders of LikeFolio and the experts behind Derby City Insights.

These two brothers have built and trained an A.I.-powered system that identifies the stocks most likely to make big moves — up or down. And today, for the first Profit Column of 2024, I’m sitting down with both Andy and Landon to discuss a rare convergence of factors that led to a grand-slam earnings season trade last year.

This rare convergence is the subject of a fast-approaching research summit with Landon and a very special guest from our network that you should do whatever you can to attend.

More on that in today’s interview below. We hope you enjoy…

The Profit Column: A Rare Earnings Report Convergence with Landon and Andy Swan

Michael Salvatore, Editor, TradeSmith Daily: Andy and Landon, it’s great to see you. Thanks for joining me today.

Andy Swan, Founder, LikeFolio: A pleasure as always, Michael.

Landon Swan, Founder, LikeFolio: Likewise — thanks for having us.

Michael: So, let’s get right into it. To me, this trade on SNOW [Snowflake] is a perfect example of how you trade earnings season the right way.

You earned over a 70% gain in less than five days trading this stock back in August, right around the time markets were bouncing amid a major drawdown.

How were you able to call this trade out?

Andy: Right, so let me first walk you through our process, then we’ll talk about SNOW.

First off, every Sunday during earnings season, we send out our Earnings Scorecard for the week ahead. This is a can’t-miss report for our subscribers.

It shows every company we track in our database due to report earnings, our top trade candidates for the week to come, and a detailed breakdown of each strategy in our toolkit that we use to trade each stock.

If you hold a stock reporting earnings that week, we have ways for you to add to your position at more favorable prices. Or, if you’re looking purely to trade the stock, we have recommended strategies for that, too.

Landon: And look, we understand trading can feel intimidating for newer investors, so we make it easy. We cover every single trading strategy we recommend in our “How to Trade Earnings” Masterclass series, and link our subscribers to those video lessons whenever we recommend one. I also film a fresh video every week of earnings season where I show our subscribers hands-on how to place these trades.

Andy: You don’t have to trade to benefit from the price moves we anticipate, either. But trust me. It’s a fantastic way to amp up your profits and limit your risk.

Landon: So true, Andy. And here’s where it gets fun for a couple of data nerds like us…

Each of the strategies we recommend is carefully tuned to our proprietary — and highly predictive — metrics. We call these metrics “alt data” — because it’s quite different from what most Wall Street firms access.

I’ll share more about this alt data in Tuesday’s presentation, so I’d urge your readers to tune in to learn all about that.

So we distill all the data points we have on a company into a score that tells us how bullish or bearish we should be on the upcoming earnings event.
These precise signals help inform how we play each earnings report. The stronger the signal in either direction, the more aggressive the strategy.

Michael: It’s so good to see you apply systematic strategies to earnings season.

And I understand that most of this is powered by A.I.

So tell me about that — how do you choose these trade candidates?

Andy: We can’t get into all the datasets right now. For one, we’d be here for more time than any of us have today. And two, we hold these datasets very close to the chest.

Landon: Don’t forget we also have a big announcement regarding our technique, which we’re hoping doesn’t leak out before the big event on Tuesday.

Andy: What we can tell you is that we use something the vast majority of Wall Street investors hardly ever consider before they place a trade.

It’s not financial data, or economic data, or anything like that. We use those fundamentals too, don’t get me wrong. But our real edge lies in our proprietary consumer insights.

Landon: Yeah, and SNOW was a perfect example of this in action. It’s a fundamentally strong company, and it’s historically done well on a few key areas that make it a prime earnings target.

In fact, in the webinar coming up, I’ll be joined by a special guest who’s been rating companies based on specific factors for much of his career. He shared his rating on SNOW after we got to talking, so I’ll share it here with you as well.

Notice how the stock rates especially well on Sales Growth, Earnings Momentum, Earnings Surprises, and Analyst Earnings revisions. All of these factors are exactly what we want to see in an earnings trade candidate.
Michael: That’s amazing. SNOW seems like the perfect stock for these strategies.

[TradeSmith Daily readers, take note that SNOW’s next earnings report is set for Feb. 28. Mark your calendar for that one.]

So, let’s now talk about the SNOW trade itself…

Andy: Absolutely.

SNOW appeared on our Earnings Scorecard for the week of Aug. 21 and was the top candidate for that week. We cover dozens of companies and trades each week, but we always handpick one as our favorite and send it straight to our subscribers.

Based on its fundamental health, its history of earnings surprises, and what we see in our alt data, SNOW became an instant standout for us.

Landon: It’s important to mention too that for Snowflake specifically, one key metric in our alt data has been highly predictive of past earnings reactions… so it’s one we paid special attention to.

Andy: Exactly, thanks Landon.

With that in mind, we leveraged one of our favorite trading strategies that has a risk-reward ratio close to 50/50 and is super simple to understand.

Basically, you make money if the stock goes up and lose money if it goes down — but you cap your losses going in, so you always know what’s at stake.

Landon: And a few days later when SNOW reported earnings, our trade had surged over 70%, and we were taking profits by that Friday.

Michael: In and out in five days for a 70% win, while also limiting your downside. That’s an earnings report dream scenario.

Now, I understand you guys are about to open up access to your Earnings Season Pass to new subscribers for 2024. This is an opportunity that only comes around at the beginning of each earnings season.

And as you’ve been mentioning, you’re going to be joined by a pretty major figure in our network. Someone you haven’t openly collaborated with until now.

I know you don’t want to reveal too much, but any light you can shed on this?

Landon: All I can say, Michael, is that we teamed up with a true growth investor icon — and I’ve never been quite as excited for an earnings season before today.

This guy is an industry veteran, who really knows his stuff. So we’re incredibly excited to be working with him and uncovering the value he can bring for our subscribers.

Michael: Can’t wait to check out the event next week and see what you guys are cooking. Thanks as always for coming on, fellas.

Andy: Thanks for having us, Michael.

Landon: Thanks Michael.

Andy and Landon’s Earnings Season Pass opens up this coming Tuesday, in a can’t-miss presentation with the man CNBC called “The Earnings Whisperer.”

They’ve joined forces to reveal the greatest earnings trading strategy in existence, harnessing the power of A.I. to predict earnings moves well in advance of the crowd.

The first quarter of this year may be rocky, if this week’s price action is any indication. You’ll want to do more than buy-and-hold if you want to make the most of it. And earnings season is the perfect time to zig while the market zags.

Go right here to secure your free spot at Tuesday’s event, and to check out all the exclusive videos and research that comes with it.

To your health and wealth,

Michael Salvatore
Editor, TradeSmith Daily