Earnings season often brings sharp moves in stock prices, as companies reveal whether they’ve met, missed, or exceeded expectations.
Strong reports can trigger quick rallies, but those gains are often short-lived as investors lock in profits. Even great numbers can lead to selloffs if expectations were too high or guidance disappoints.
That’s why it’s often wise to take profits when a stock surges on a good report. Markets tend to reward anticipation more than confirmation.
Accordingly, it's time to cash in our shares today on two recent winning HX Trader picks. Two trades that were bread-and-butter earnings report plays, the kind we’ll do over and over.
Here is the update…
First up is one of our most recent ideas, early education and childcare services provider, Bright Horizons Family Solutions Inc. (NYSE: BFAM).
You can read the original report from July 23rd here.
As we explained in our note -
“With the stock trading at a relatively low valuation compared to its long-term growth prospects, we see upside potential at HX Trader if the company continues to execute and expand its footprint.”
Well, on Aug 1, Bright Horizons delivered a solid earnings report with beats on both the top and bottom lines. BFAM reported a 9% increase in revenue, reaching $732 million, and a 22% rise in adjusted EPS to $1.07, both surpassing expectations.
This strong financial performance underscores the company’s effective strategies and market position.
With the stock up over 11% since reporting, it’s time to take our profits!
ACTION TO TAKE: Sell your shares of Bright Horizons Family Solutions Inc. (NYSE: BFAM for a profit of +9.8% in 19 days or +188% annualized.
Next up in our profit-taking double header is public safety and enterprise security technologies leader Motorola Solutions, Inc. (NYSE: MSI).
You can read the original report from May 7th here.
When we published our MSI note, shares were trading down sharply after a slight revenue miss and a reduction of Q2 guidance delivered in the company's Q1 '25 earnings report.
In our original note, we wrote:
“This sets up MSI nicely to beat numbers next quarter. We believe Motorola Solutions can run up a lot before its next earnings report in August.”
That is precisely what’s happened. With the stock trading over $446 per share today, and Q2 earnings later this week, it’s time to take profits on this successful trade.
ACTION TO TAKE: Sell your shares of Motorola Solutions, Inc. (NYSE: MSI) for a profit of +7.2% in 89 days or +29.6% annualized.
