Earnings Duds and Earnings Studs

On Thursday, I ran through the results of Morgan Stanley (NYSE: MS ) and Bank
of America (NYSE: BAC ) two stocks I named as earnings duds. Today, we have
another dud that reported earnings and shocked Wall Street but not me. Earnings
Duds Poor, poor Google Inc. (NASDAQ: GOOG ). On Friday, revenues and profits
failed to meet analyst expectations , and the stock got a quick $50 haircut. As
I mentioned in my earnings preview for GOOG, this stock is just too much of a
wild card to be a good investment right now, and this earnings report proves it.
Until its clear that their new growth initiatives are really boosting sales and
earnings, my advice remains the same: Avoid this stock . Earnings Studs We
covered UnitedHealth Groups (NYSE: UNH ) results a couple of days ago . This
superior company blasted through analysts estimates. The stock did not gain the
immediate momentum as I had expected, but I do expect these results will prove
to be another stepping stone to higher investor returns in the weeks to come.
Since Thursday, Ive also seen three more earnings studs report. Here are the
results and my take on each: Expectations were low, and IBM (NYSE: IBM ) took
full advantage of the situation. Revenues were up 1.6%, gross margins increased
to 49.9% and the company met analyst expectations on earnings per share. There
will continue to be the naysayers that point to weak technology spending as a
reason not to buy IBM, but the company is well-diversified, has the right
management in place and has a 100-year history of proving people wrong. Shares
have risen over 4% since Fridays earnings announcement, making this company in
earnings stud territory. Intel (NASDAQ: INTC ) pleased investors with its report
as well. Revenues were up 21%, and earnings came in 7 cents, or 11% higher than
analysts were expecting. Forward guidance was in range of what analysts were
expecting, and all is well with the semiconductor giant. Fridays news should add
some stability to the stock, which will entice more investors to pile on. I
expect solid performance from the company, and heres the best part: INTC pays a
2.1% dividend! Intuitive Surgical (NASDAQ: ISRG ) nailed it with earnings. Total
sales jumped 28% year-over-year thanks to increased sales of its patented da
Vinci surgical system. This trumped the consensus sales estimate by 3%. Net
income jumped 25%, and the company posted a 12% earnings surprise. However,
despite the fantastic news, share dropped sharply down over 3% since the
earnings announcement. I still consider this stock to be a strong buy, and as
Ive stated before, I expect ISRG to have plenty of upside left . More Earnings
Fun This Week! The Big Kahuna, of course, is Apple (NASDAQ: AAPL ), reporting
Tuesday. This stock earns an A rating according to my stock-screening system, so
you know Im expecting good things. Also reporting are important market leaders
like McDonalds (NYSE: MCD ), Caterpillar (NYSE: CAT ) and Johnson & Johnson
(NYSE: JNJ ). Of course, lets not forget the telecom twins, Verizon (NYSE: VZ )
and AT&T (NYSE: T ). So far, the good earnings reports seem to be outweighing
the bad: The S&P closed above 1,200 for the first time since July 2011. I
predicted before the year began that 2012 could see as much as a 20% gain in the
major indices , and Ive seen nothing so far in these earnings reports to change
my forecast. If you want your share, you just need to stay invested in Americas
best companies. And if you want to do even better than the market averages, just
follow me to the strongest, most fundamentally sound companies. Thats the best
way I know to make up the ground youve lost over the past five years.