Rules of the Game: Three Solid Performers to Watch

 | Jan 10, 2013 | 1:00 PM EST
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When seeking some large-cap anchors for equity overlay positions within your portfolio, it's crucial to screen for solid earnings track records. Historically, many of the best price movers sport several quarters of double-digit earnings gains. I regularly run scans for this type of growth, and compare the results against the earnings estimates for the next year or two.

1. Comcast (CMCSA) was among the large caps uncovered by my scan. The company grew earnings between 19% and 39% in the past four quarters. Income grew in each of the past six years, and Wall Street expects a 23% increase in 2012, to $1.94 per share. Comcast is scheduled to report full-year and fourth-quarter results on Feb. 13 before the market open. Comcast's dividend yield stands at 1.7%.

This year, analysts are eyeing earnings per share of $2.23, which would be a 15% increase over 2012's expected result. This month, the stock has repeatedly hit resistance just below $38.60. On the dips, it got support well above its 50-day average.

2. One of this week's monster stocks, Celgene (CELG) , also made it onto my earnings stability screen. It closed Wednesday at $92.34, which was a new closing high for the stock.

Following upbeat company forecasts at the J.P. Morgan Healthcare Conference, the stock is up 12.5% so far this week. Celgene expects to double sales by 2017 on new products as well as new uses for existing products. Celgene also got a boost from some subsequent analyst upgrades.

Earnings grew at rates ranging from16% to 46% in the past eight quarters. Celgene is expected to report its 2012 results later this month. For the full year, Wall Street has pegged earnings at $4.88 per share, up 29% from 2011. Next year, that is expected to grow another 14%, to $5.57 per share.

A glance at Celgene's chart makes it pretty obvious that this stock is extended well beyond any purchasing point at this moment. A pullback to a short- or medium-term moving average could offer a new buying opportunity.

This is a fairly classic large-cap growth stock. Though it has a market cap of $39 billion and trades more than 3 million shares per day, it pays no dividend. That's not uncommon for biotechs, which prefer to reinvest in research and development, rather than making payments to shareholders.

3. For a large-cap with earnings growth that has been trending higher, look to T. Rowe Price (TROW). Earnings in the most recent quarter were $0.94, up 32% from the year-earlier quarter.

The investment advisor is expected to report full-year and fourth-quarter results later this month. Wall Street is anticipating year-over-year growth of 15%, to $3.37 per share.

T. Rowe Price has market cap of $17.19 billion, and moves more than 1.3 million shares per day. Despite that size and liquidity, it still has a high beta, 1.36, meaning it is prone to some volatile trade. The stock rallied to a multi-year high of $68.50 on Monday, and has been gradually pulling back. It closed at $67.44 Wednesday, getting support at its 5-day exponential moving average.

The pullback could offer a technical buying opportunity, but keep in mind that the upcoming earnings report has potential to send the stock sharply in one direction or the other. 

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volatility is quite low here, and we could see some downsides here in the short term. ...



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