Offering earnings guidance above analyst expectations is obviously a bullish sign, as over time earnings growth follows sales growth. And when a company predicts greater sales or profits, we expect its stock price to soon follow.
Sometimes things don't work out as planned, though, so we'll pair up the brighter outlook with the sentiments of more than 180,000 members of Motley Fool CAPS. If the best and brightest stock pickers think a company's long-term potential is outstanding, coupled with the company's own improved sentiment, maybe investors should take notice, too.
Here are two stocks that recently raised guidance.
|
Stock |
CAPS Rating |
Prior or Consensus Estimate |
Current Guidance |
Period |
|---|---|---|---|---|
|
InterDigital |
**** | $66 million | $71 million | 2012 Q2 |
|
NVIDIA |
**** | $978 million | $990 million - $1.05 billion | 2012 Q2 |
Source: Briefing.com, Yahoo! Finance. Note: Figures are estimates for revenue during period.
Don't blindly buy into their heady outlook -- you still need to do some research. Use this as a jumping-off point for additional research.
Going mobile
The 4G LTE network tsunami is just getting started and, as I see it, it should carry wireless specialist InterDigital higher when the wave finally breaks on the shore.
Verizon and AT&T have widely deployed their 4G networks, Apple is rumored to be unleashing a 4G-capable iPhone upon the world sometime this year, and the technology will be going global soon enough. InterDigital's patents should once again be recognized as the valuable assets they are, perhaps even more than they were last summer when takeover speculation reached a fever pitch.
That could be why the technologist is shopping them once again, but this time bundling them up in smaller groupings that could create more interest among buyers while also bringing in more money.
With shares down 70% from 52-week highs, InterDigital has certainly been beaten down. But with revenues still falling, the Fool's Rex Moore thinks it's worthwhile waiting a quarter or two to see if management can execute on its plan. CAPS member jackycheng agrees management has not shown itself capable just yet, but with the beaten-down price it might be wise to take a position here:
Though the business is slowing down and the company is lacking of management skill to monitor the recurring incomes, it would not be a bad choice to buy it now after the great drop as the patent the company hold would likely worth more than the current market value.
Tell us on the InterDigital CAPS page which camp you fall into, then add the stock to your watchlist to see if someone takes up the patent bait.
A gouge, not a chip
Graphics chip maker NVIDIA might be another one you want to put on hold. While it beat analyst expectations handily last quarter and is raising its guidance, there are still several hurdles it needs to jump before the picture becomes clearer.
The mobile market driving InterDigital is also one that holds a lot of promise for NVIDIA, which has had to expand into new markets to counteract both the dwindling GPU segment at the same time that Intel
CAPS member Gunner1223 is willing to take the plunge early, believing the mobile sector will be the place for NVIDIA to make its stand. With 95% of the nearly 5,500 CAPS members rating the chip maker marking it to outperform the market averages, maybe the saying "he who hesitates is lost" applies here.
Add NVIDIA to the Fool's free portfolio tracker and tell us on the NVIDIA CAPS page or in the comments section below if you agree it's better to wait or whether it will be too late if you wait for the fog to clear.
Raise your sights
These stocks may have raised expectations, but there's a new technological revolution with even wider implications than before and The Motley Fool has discovered three companies ready to capitalize on the boom. Read the free report The Future is Made in America to find out who these winners are, but hurry because it's available only for a limited time.
