老李玩钱: 3 Stocks to Watch This Week: Q2 Earnings Report Analysis & Stock Picks

Navigate the upcoming financial reporting season with insights into potential stock opportunities! This week kicks off a flurry of earnings releases, potentially creating volatility and chances to invest in quality companies. We'll delve into three specific stocks and discuss strategies for navigating potential post-earnings dips, focusing on buying opportunities.

Quick Takeaways:

Financial Reporting Season: Expect increased stock volatility creating buying opportunities.
Netflix (NFLX): Eyes on potential dip to $1160 or below post-earnings for entry.
TSMC (TSM): Consider buying at $216 or lower if the stock price dips after the report.
ASML (ASML): Look for entry points if the price adjusts to $750 or lower.
Caution: Financial reports can be unpredictable, impacting even good companies.

Discover how to potentially capitalize on the "beauty turn" – when a stock price dips after a financial report. Remember to do your own research before investing and don't consider this financial advice.

Hello, everyone. I'm Lao Li. The new financial reporting season officially starts this week. This period will bring increased share price fluctuations, potentially offering new opportunities.

Understanding the Impact of Financial Reports

Companies, regardless of size or performance, will be releasing their second-quarter 2025 financial results. A company's stock price can react in various ways after a report is released.

Sometimes a positive report leads to an increase.
Other times, even with a good report, the stock price may decline ("beauty turned around"), presenting buying opportunities.

I have selected three companies issuing reports this week that I believe are worth considering.

Account Update and Lululemon (LULU) Analysis

Before diving into the stock picks, here's a quick account update: Despite slightly negative closes for the three major indexes, my account has seen an increase, reaching $149, with total assets exceeding $242,700.

I also want to briefly discuss Lululemon (LULU). Following its last financial report, unfavorable guidance caused the stock price to drop. Currently, many institutions are taking a cautious approach. I plan to add to my existing 38 shares of LULU if the stock price falls below $225, increasing my position to 40 shares. However, I'm hesitant to significantly increase my LULU holdings due to the current negative sentiment and institutional short positions. While the stock price may continue to decline in the short term, I remain optimistic about its long-term growth potential.

Wall Street's Outlook on the Financial Quarter

Wall Street anticipates a potentially sharp contrast in profit and loss during this financial quarter. The index is projected to increase by only 4.8% to 5%, representing the slowest growth since Q4 2023. Analysts predict a more significant share price correction than usual this quarter.

This somewhat pessimistic outlook stems from three primary factors:

Uncertainty of tariffs and trade: Ongoing tariff threats cloud profit prospects.
Economic slowdown and weak consumer spending: Lower consumer expenditure data raises concerns.
High valuations: The S&P index's long-term supply and demand ratio is nearly 22 times higher than its 10-year average. Consequently, any underperforming profit report could trigger a strong negative market reaction.

Avoiding Financial Report Bets

I don't recommend betting on financial reports. The outcome isn't always predictable. Even positive reports can sometimes lead to stock price declines due to various influencing factors. Dago serves as an example: despite consistently strong financial reports, its stock price has experienced downturns on multiple occasions.

Instead, consider the financial reporting season as an opportunity to buy into good companies that you have been monitoring but haven't had a chance to buy. This period may provide a more reasonable entry price.

Three Stocks to Watch This Week

I've identified three companies releasing financial reports this week that could present potential buying opportunities if their stock prices decline after the release.

1. Netflix (NFLX)

Overview: A major media company. Previously one of the "FANG" stocks.
Financial Report Date: After this Thursday.
Implied Volatility: The options market is pricing in an implied volatility of approximately 7.6% for Netflix's financial report.
Historical Fluctuation: In the past 5 years with 19 financial report data points, the average return per day is 11%, and the average return per day is 6.9%.
Current Situation: The stock price has retreated in the last two weeks.
Valuation: Trailing PE is 58.84, Forward PE is 49.75, PEG ratio is 2.35, and Price to Sales is 13.58, indicating a high overall valuation.
Potential Strategy: If the stock price declines significantly after the report, consider opening a position around $1160. If it falls further, adding more at $1070 or below.
Considerations: Netflix's high share price makes it less accessible to retail investors, and it's a stock that is likely to go bankrupt in the future.

2. Taiwan Semiconductor Manufacturing (TSM)

Overview: A major chip manufacturer; processes designs from companies like Nvidia and AMD.
Financial Report Date: Before the 4th of this week.
Analysis of TSMC: If you compare the current AI wave to a big gold pool, TSMC is the Taiji to design shovels. After you design it, these shovels have to be handed over to Taiji to do this work.
Historical Performance: In the past four years (16 financial reports), the stock price has fallen 50% and risen 50% after the report's release. Historically, it is half open.
Valuation: Trailing PE is 26.99, Forward PE is 24.04, PEG ratio is 1.62, and Price to Sales is 11.12, which is considered reasonable.
Historical Fluctuation: The average absolute change in its stock price is approximately 4.3% to 5.2%.
Potential Strategy: Consider opening a position at or below $216, with further additions possible at $206 or lower.

3. ASML Holding (ASML)

Overview: A company that produces optical computers, vital in the semiconductor chip industry and its supply chain.
Financial Report Date: Before the 3rd of this week.
Tariffs Impact: Heavily affected by tariffs, resulting in less price momentum than other chip stocks.
Valuation: Trailing PE is 30.89 and Forward PE is 28.57.
Valuation Analysis: ASML's actual valuation level now may be a little higher than TSMC's.
Potential Strategy: Consider opening a position at $750 or below, with further additions possible at $675.
Considerations: ASML may not look expensive on the surface but we still need some discount on its stock price.

Final Thoughts

These three stocks are my focus this week. Whether or not they provide opportunities after their financial reports remains to be seen. If not, don't worry. Many companies will be releasing reports, and some will likely experience significant price drops, creating new entry points into quality companies.

Additional Information

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