Top 4 Stocks to Watch During Earnings Season

Shah Gilani

Earnings season usually kicks off "officially" with Alcoa Corp. (NYSE: AA) scheduled to report earnings after the market closes on July 15, but we all know things are already heating up.

I'll let you know if anything happens there you need to know about, but I'm not really here to talk about Alcoa right now.

Instead, I want to run down four stocks that'll be reporting between now and mid-August. Each one of these has the potential to make big moves before then, and I've got some key buy-in levels to share.

Even better, I've got two inexpensive trades to put on, each with a beautiful low-risk, high-reward profile.

Here are the tickers and trades...

This Stock Could Be in a Short Squeeze

First up on my shortlist is CuriosityStream Inc. (NASDAQ: CURI). This is a media company and streaming service that provides premium video programming of factual entertainment - science, history, society, nature, lifestyle, and technology.

That may or may not be your cup of tea, but the stock has me interested for three reasons:

First up, the stock has experienced pretty solid support at the $12.05 to $12.35 range over the last seven months. I like targeting the stock if it gets back down to that range, which is a distinct possibility over the next day or two, given its short-term downward trend since July 9.

What's more, CuriosityStream is scheduled to report second-quarter 2021 earnings on Aug. 10, 2021, which means we could see a pop alongside an earnings beat in less than a month.

Finally, and best of all, CURI's short float is 17.5%, which means it could experience a classic short-squeeze candidate as we draw nearer to earnings on Aug. 10.

If the stock pulls back to $12.15, I like buying the CURI Aug. 20, 2021 $12.5/$15 call spread for $1 or less. At that price, the trade has a 2.5-to-1 reward to risk profile, which I like a lot. A cheap stock and an even cheaper trade.

I've been traveling a lot recently, and every flight and airport has been packed. Granted, most of those flights are at discounted rates, designed to entice travelers, but I don't think those prices are going to stay low for much longer.

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These Stocks Are "in Play" Today

That's why Delta Air Lines Inc. (NYSE: DAL) has my attention now. It reported second-quarter earnings before the market opened on July 14, and the reports were great, all things considered.

Not least because the company reported leisure travel demand has "fully recovered" from the pandemic, which speaks to the power of the overall recovery.

Delta reported its first quarterly profit since late 2019, though that was largely down to a lifeline from Uncle Sam.

Airlines in general and Delta in particular are still on the back foot because lots of lucrative international travel has yet to recover, which is one of the reasons why Delta's forward guidance includes lower revenue expectations for the third quarter of 2021.

Wall Street sold the rumor on Delta, hard. As of midday on July 14, it was down a little less than 2% for the day, which gives us a nice buy price; as travel recovers and ticket prices start to rise, margins will fatten back up right alongside the share price. Make sure you're along for that ride.

I spoke about the financial sector last week on FOX Business Network's "Varney & Co.," when guest host Ashley Webster asked me what I thought.

I like the sector, and I think dips in the best stocks there are real buying opportunities. I think, long term, we're in for a rally there for at least the next several quarters as inflation settles in. In fact - and you read it here first - I see the 10-year U.S. Treasury yield ending the year between 1.75% and 2%; an increasing yield curve is going to be better for banks.

Wells Fargo & Co. (NYSE: WFC) is a name I love in this space. It's scheduled to report second-quarter results after the market closes on July 14 - which, by the time you read this, will have already happened.

The company was expecting to swing from a $0.66 loss in Q2/2020 to a $0.96 profit this quarter. Compared to the other large banks, that'd be one of the biggest swings, which means a lot of investors are going to be watching Wells Fargo to see what it reports.

We'll see what the market thinks. Any "sell the rumor"-type sell-off in Thursday's trading should be seen as a buying opportunity.

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A Hot Sector Wall Street's Overlooked

And finally, I'm looking hard at Kansas City Southern (NYSE: KSU), a railroad company based in Kansas City, Missouri. Kansas City Southern has a network of 6,700 miles of track throughout the United States and Mexico. The company was lately the subject of a kind of bidding war between Canadian National Railway and Canadian Pacific Railroad - a war which, $33 billion later, CNR won, pending regulatory approval of course.

It's not hard to see why the two railroad giants went to war over Kansas City Southern. Transportation is red-hot right now, with many shipping methods running at or even just beyond capacity.

The company is scheduled to report Q2/2021 earnings on July 16th before market open. Earnings for the quarter are expected to come in at $2.20, which represents a 91.3% increase over the same period a year ago.

That's a big jump, but it's not surprising. Demand for goods in stores after the lockdown and bottlenecks in the supply chain gives Kansas City Southern potential pricing power. That could show up in forward guidance, which could drive the KSU shares higher.

Speaking of the stock, since the top of 2021, the stock has experienced two significant gaps higher, with the most recent gap occurring on April 20, 2021, when it gapped up 13.5% overnight. Since then, though, the stock has pulled back to fill a good portion of that gap, which is great.

If the stock surprises with any portion of its results, we could see another gap up. With that said, ahead of earnings, I like buying the KSU July 23, 2021 $272.50/$275 call spread for $1 or less.

Lots of These Opportunities Trade for $1

Some of what could be the year's best investments won't exactly make waves this earnings season - the real fireworks start when and if they go public.

There are around 500 U.S. companies looking to hit big exchanges right now, and many of them are offering what I call "pre-IPO rights." You can call dibs on these for a buck in many cases, but in the event the companies go public, well, then get ready... Peak gains of 2,088%, 6,566%, 8.280%, 9,075%, even 27,550% have been realized in exceptional cases. These "pre-IPO rights" can bring head-spinning profit potential, and you can learn more about them right here...