The Big News on 2Q14 Earnings Season So Far

My Two New Favorite Stocks This Earnings SeasonThe numbers are in from Johnson & Johnson (JNJ) and they’re good. The position sold off on the news, which is no big surprise considering how well it’s done since the beginning of the year.

Johnson & Johnson is still mostly a pharmaceutical play, but it won’t likely be able to produce the same growth results it experienced from its hepatitis C drug in its most recent quarter.

The company adjusted its earnings-per-share guidance slightly higher and lowered its full-year sales guidance also just slightly.

The second quarter saw the company produce sales growth of nine percent to approximately $19.5 billion and adjusted earnings growth (excluding one-time items) of about 12% to $1.66 a share, which handily beat Wall Street consensus. (See “Why This Institutional Favorite Tops My List of Stocks.”)

While I do think that second-quarter earnings from blue chips will be pretty decent, it’s not unreasonable at all for these positions to sell off on the news. Stocks have come a long way, even just since the beginning of this year.

The stock market needs a break, or at the very least, another material price consolidation. It would be a healthy development for the long-run trend.

Another company that just reported a decent second quarter was CSX Corporation (CSX), which is the biggest railroad in the eastern U.S. market.

Management cited broad-based economic momentum in its rail freight business. The company’s numbers basically met consensus with second-quarter sales growth of 6.5% to $3.24 billion and earnings of $529 million, or $0.53 per share, up a penny from consensus.

The company plans to increase its capital spending due to the solid demand it’s experiencing, and management affirmed current guidance for the year.

Also in the transportation business, J.B. Hunt Transportation Services, Inc. (JBHT) saw its second-quarter revenues grow 12% comparatively to $1.55 billion, which is a solid performance. Net earnings grew six percent to $93.4 million.

This year, the trucking company expects its total sales to grow by 10%–12% over 2013, which is a very good performance for such a mature industry.

The big news recently was Intel Corporation’s (INTC) numbers. Not too long ago, the computer chip–maker raised its guidance; its second quarter beat consensus anyway and the stock shot up on the news.

The company’s second-quarter sales grew eight percent comparatively to $13.8 billion. The company’s PC client group experienced a six-percent year-over-year gain to $8.7 billion, while data center sales saw a 19% annual gain to $3.5 billion.

Management also slightly increased its full-year sales expectations for year-over-year growth of approximately five percent.

The Street loved the company’s numbers, and the stock hit a new high of more than $33.00 a share on the news.

All in all, so far, we’ve seen pretty good results from large-cap corporations and double-digit comparative growth is genuine good news.

Still, share prices have gone up in anticipation of good earnings news. Expect to see stocks sell off or consolidate on good earnings.

This market very much remains a hold.