Best Time is Earnings Season
I just can’t tell you how exciting it is to be in earnings season. It is absolutely the best time to be researching new stock market opportunities, and to review your existing positions in a portfolio.
Not all the numbers are in, but a consensus has already been built that first quarter 2006 corporate earnings have been very robust. There’s been a few disappointments, but there always are–that’s business.
I know it can be boring, but a company’s financial results are the single most important bit of information on which to base an investment decision. The first thing I do when coming across a new company or investment idea is to pull up the latest batch of financial statements to get a cursory feel of the company’s current status as a business.
In my view, it is very important for a company to have a track record of financial growth. It is also important for a company’s stock price to have some positive track record on the market.
Consider one of the best companies in the burgeoning eye care business. LCA-Vision, which provides eye laser surgery through 52 “LasikPlus” centers. The company just released its latest numbers for the first quarter of 2006 and they were impressive.
According to the company, its revenues rose 46% to $73.4 million in the first quarter, as compared to $50.2 million in the first quarter of 2005. The number of laser eye procedures the company performed rose 42% to 53,372, from 37,578 in the first quarter of 2005.
The company’s net income rose an impressive 41% to $13.1 million, and its net earnings per diluted share grew 39% to $0.61.
The company finished the first quarter of 2006 with cash of approximately $125.3 million and very little debt. The company said that it expects its sales to increased another 30% to 40% in the rest of 2006.
Clearly, when you come across numbers like this, you want to investigate further.
So, without question, the best time to be researching new investment opportunities is during earnings season. Mistakes do happen, but in the vast majority of cases, the numbers just don’t lie.