No one knows a company better than those who run it. That's why investors will often watch for when insiders are buying company stock or whether companies are buying back their own shares. These can be bullish signs for a company.
Offering earnings guidance above analyst expectations is also a bullish sign, as over time earnings growth follows sales growth. When a company predicts greater sales profits, we expect its stock price to soon follow.
Sometimes, though, things don't work out as planned, so we'll pair up the increased 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 then investors should take notice, too.
Here are two stocks that have recently raised guidance.
CAPS Rating (out of 5)
Source: Motley Fool CAPS.
But don't blindly buy into their heady outlook -- you still need to do some research. Use the announcement as a jumping off point for additional due diligence.
A rising tide
The low-interest-rate "Operation Twist" policy pursued by the Fed continues to squeeze profits from financials because it encourages borrowers to refinance at lower rates. It clears the books of banks and mortgage lenders of higher-interest loans and replaces them with others that have far less favorable terms.
Despite declines in loan balances and earning assets, Regions Financial was actually able to report improved net-interest margins last quarter because it was able to control deposit costs. Yet it can't be denied that the Fed is making things harder for the regional banking concern and its peers like Synovus Financial
Regions, however, is pulling itself up by its bootstraps. It just sold its Morgan Keegan brokerage firm to Raymond James Financial
Several years ago I rated Regions on CAPS to underperform the market and that bet has played out for me, but now it might be time to close that pick. As CAPS member LeafKnewBetter offers in this couplet, if they can get out from under TARP their performance can soar.
If they are able to pay off the TARP loan, [performance] will more than double [/] If they don't, Regions could be in deep, deep trouble.
Raising a toast
Driven by sales of multiple-myeloma treatment Revlimid, which it expects to grow 19% this year, Celgene is looking for its portfolio of in-demand therapies to carry it higher. Revlimid sales were up 30% for the full year hitting $3.2 billion, while myelodysplastic syndrome drug Vidaza rose 34%. Abraxane, which Celgene acquired in 2010, hit $384 million in sales, but it expects new indications to push sales as high as $1.5 billion by 2015.
Revlimid is obviously its main horse, and though Keryx Pharmaceuticals
Over 1,500 CAPS members have weighed in on the biotech and almost 97% of them see it outperforming the broad market averages. Add Celgene to your Watchlist to see if it has the right prescription to continue the growth trajectory it's on.
Raise your sights
These stocks may have raised expectations, but The Motley Fool found two small cap stocks that have the potential to deliver multi-bagger returns based on solid government contracts. You can get instant access to these companies by clicking here -- it's free! But only for a limited time, so hurry.
Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Huntington Bancshares. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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