Low-Key Earnings Plays

 | May 09, 2012 | 1:00 PM EDT  | Comments
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While high-profile earnings reports this week from Cisco (CSCO) and Priceline.com (PCLN) are sure to get lots of attention, some lesser-known, smaller companies may make moves in either direction following their quarterly reports.

Before Thursday's open, small-cap roofing materials distributor Beacon Roofing (BECN) delivers its second-quarter results. Analysts expect a loss of $0.08 per share on revenue of $346.1 million, on average. That would be an improvement over a year-ago loss of $0.13 per share. The company beat views in the past three quarters, reporting a profit each time. For the year, Beacon is expected to bring in profit of $1.47 per share, up 27% from 2011. 

The Massachusetts-based company went public in September 2004, and rallied to a high of $28.97 in May 2006. It's back within striking distance of that former high, closing at $26.27 Tuesday. The stock has been getting solid support at its 10-week average, a sign that institutions have been holding shares, rather than selling off ahead of the report. A buy point could occur at $27.52, its 52-week high, reached on May 1.

Also reporting Thursday is Procera Networks (PKT), which makes software to manage network traffic. It's expected to earn $0.03 a share on revenue of $11.9 million. The company beat analysts' estimates in three of the past four quarters, and met views in the remaining quarter.

As of Tuesday's close, the stock was working on its fourth straight week of downside trading. It's now about 22% below its multi-year high of $24.20, reached early last month. Procera had a big run-up between February and April, but after its recent decline, it is well below a viable buy point. It's now about 10% below its 10-week moving average.

A post-earnings bump could send the stock back into rally mode, but it's premature to say what a buy point could be, as an opportunity could occur before the stock reaches that prior high of $24.20. For example, the stock's 10-day line is below its 20-day, so a positive crossover could be constructive. 

From the ranks of larger companies, pharmacy benefit management provider Express Scripts (ESRX) reports its first quarter after Thursday's close. It's seen bringing in earnings of $0.77 a share on revenue of $11.47 billion. In the past four quarters, the company missed views twice, met once, and beat once.

The stock has been consolidating below $59 for the past three weeks. It closed Tuesday at its 10-week line, at $55.25, having rallied from closes beneath that price line in the two previous sessions. Weekly volume has been low recently, a good development as the stock consolidates. Watch for it to clear a buy point at $58.98.

There could be an even earlier opportunity for more aggressive traders, however. As is the case with Procera, the stock's 20-day line is currently above the 10-day, a not-uncommon occurrence as a stock consolidates. The 10-day line has been moving higher in the past couple of sessions, as the stock attempts a rally. If the 10-day crosses above the 20-day, that could offer an early entry point.

But there's another "however" -- and this one has to do with the market. With the major indices still in a correction, it makes new buys a risky proposition. Even if an individual stock rallies during a broad market correction, it could easily be dragged back down in another bout of market-wide selling.

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