Exclusive: Earnings Season Preview Reveals 4 High-Potential Trades to Watch

Jul 10, 2022

Earnings season is our favorite time of the year.

It’s when LikeFolio’s consumer data gives us a unique advantage over the rest of the market — and this season is no different.

Thanks to our proprietary earnings scores, which allow us to predict which companies will surprise the market and which ones will disappoint expectations, we’ve already uncovered four high-potential profit opportunities to watch.

Here’s how: Our earnings scores compress the underlying data for a given company and provide a snapshot of its near-term performance on a scale of -100 (most bearish) to +100 (most bullish). Combined with other factors like price momentum and past performance, these scores allow us to identify opportunities for actionable earnings trades.

Check out just one example of how we’ve put these scores to use to book big gains.

Last quarter, Grocery Outlet (GO) popped up on our radar with a very bullish score of +62. Backed by strong macro tailwinds, we decided to take a big shot to the upside…

GO shares gained by more than 15% on the week, and LikeFolio booked a 360% gain with a bullish call spread.

This is just one example of our earnings edge in action. And with more than over 300 covered companies, there’s never a shortage of setups.

So, with earnings season right around the corner, here’s a sneak preview of four companies that we’re excited to trade this quarter…

Oversold Tech Unicorns Could Surprise Us

To say that unprofitable technology companies have sold off recently would be the understatement of the year. Many tech “unicorns” have declined by 75% or more from the highs seen in 2021.

But bullish scores suggest that some of these names could be due for a relief rally this quarter.

Shares of the clothing resale platform Poshmark (POSH) are down 90% from their January 2021 debut and 35% year-to-date (YTD).

But contrary to Wall Street’s outlook, the LikeFolio Earnings Score for POSH is starting to reach new highs, sitting at a record +79 for 2022.

Opendoor Technologies Inc. (OPEN), an online real estate marketplace that went public in 2020, hasn’t fared much better with its share price, which is down 65% year-over-year (YoY).

But like Poshmark, Opendoor’s earnings score is showing strength at +84.

All this data tells us that while these “oversold” names are hated by Wall Street, they could surprise with big upside when earnings are released.

We’ll be looking at “home run” swings on these names as earnings season progresses.

Now, let’s take a sneak peek at another sector that’s setting us up for profits.

Car Rental Weakness Creates Opportunity

Last year’s auto shortage and travel restrictions turned rental cars into a hot commodity.

Now, gas prices are soaring, consumers are returning to air travel, and LikeFolio earnings scores suggest a slowdown in revenue approaching for companies in the car rental industry.
Avis Budget Group (CAR) was a huge bullish winner for us in 2021. We rode the stock from below $100 in June to a blow-off high of over $500 in November.

Although CAR shares are still up by more than 100% YoY, they’re showing signs of weakness.

CAR’s earnings score has been trending lower for most of the year, currently at a decidedly bearish -64.

Hertz Global Holdings Inc. (HTZ) enjoyed an equally incredible influx of consumer demand in 2021, which resulted in the share price gaining by more than 200% in a matter of months.

The stock has already pulled back 32% YTD, and considering the company’s less-than-stellar balance sheet, we’re expecting to see more selling ahead.

Hertz’s earnings score dove lower in March 2022 and has remained incredibly bearish since then at -88.

The bottom line for this earnings season is that preliminary scores are pointing to hidden strength for several oversold tech names and a slowdown in the red-hot car rental market.

We’re gearing up for another action-packed season of earnings trading.

The Week 1 Earnings Sheet and video will be going out to LikeFolio Earnings Season Pass subscribers tonight at 7 p.m.