Though I use technical analysis to guide buy and sell decisions, I also incorporate fundamentals into my screening processes. In fact, I have several screens that focus on various fundamental indicators. I may place stocks like these on an active watch list or, if the technicals are lacking, I might just monitor them on a regular basis.
One of last year's best large-cap earnings performers was biotech name Celgene (CELG). The company reported yearly income of $3.79 per share for 2011, a gain of 36%. This year, that number is expected to rise another 29% to $4.88 per share.
The company boasts a healthy return on equity of 30%. Free cash flow per share increased in each of the past three years. Both of these are good measures of a firm's financial strength, and can indicate potential for further price gains.
The stock pulled back last week along with the broader market. It's getting support well above its 10-day moving average, and below its Oct. 5 all-time high of $81.24. On Friday, the company got a nod from the Food and Drug Administration for its lung cancer drug Abraxane. The stock finished 0.9% higher on the session at $78.42. It lost 2.3% for the week.
This stock could be considered in buy range. However, be aware that Celgene is set to report its third quarter on Oct. 25. The company is seen earning $1.26 per share on revenue of $1.41 billion, which would represent year-over-year increases.
Another large company that has been an earnings leader is Imperial Oil (IMO). The Calgary-based company is active in upstream and downstream segments of the oil-and-gas industry, from exploration and production to refining and marketing. Its exploration operations are in the Canadian oil sands, as well as on offshore rigs
The company earned $3.77 per share last year, a gain of 35% vs. its 2010 profit.
Earnings and revenue growth have both slowed in recent quarters along with a general decline in oil prices. The company is expected to show an increase of just 1% this year, to $3.81 per share. That's not necessarily a deal-breaker in terms of potential price progress. If a company with slowing earnings growth tops views and issues upbeat guidance, the stock could make a move higher.
Dividends have increased in nine of the past 10 years, and return on equity is strong at 26%.
The stock reached a 52-week high of $50 on Sept. 14, but turned tail, and is now consolidating above its 200-day moving average.
Though the company has market capitalization of $38 billion, it trades only 100,000 shares per day on average. Such thin trade often makes a stock volatile, and that's the case here. Imperial has a beta of 1.3. A glance at the chart shows wide and loose trade, meaning that it could potentially be hard to hold.
Imperial is expected to report its third quarter on or around Nov. 1. The company beat earnings views in three of the past four quarters, but missed most recently. This time around, it's expected to earn $1.06 per share on revenue of $8.51 billion. Those would represent increases over the year-ago quarter.