ROKU Stock Forecast & Predicting Earnings Surprises
ROKU has exploded higher this year after multiple big earnings surprises out of very strong technical patterns.
A lot of information can be tweaked online but you can’t change the video upload date on Youtube.
Shortly after we uploaded the video, the stock took off and surged about 50% higher within several weeks. We featured the stock a few days prior in our alert service. Not the first or second but the third time we featured ROKU this year just before an enormous move higher.
It soared before generating a bearish candlestick pattern as we pointed out right after the bearish signal occurred. Those using our exit strategies got out with a great profit ahead of the fall.
Long-term Stock Price Forecasting
To me forecasting a future stock price for a stock like ROKU is difficult at best over the long-term.
However, if you have a strong long-term uptrend, a quality consolidation pattern and then a breakout on game-changing news, there is a good probability the stock will move much higher in the short-term I would say after trading more than 10 years.
This applies to top growth stocks in the market like ROKU during market conditions that are good enough. Fortunately, market conditions are usually good enough.
So we don’t bother forecasting the stock price over the long-term. We look at stocks with the best fundamental factors in the market and wait for a great technical pattern to develop.
If the price reaches a good technical entry point on a great catalyst, our future swing trading price forecast will likely happen within days or weeks instead of years or never.
Predicting Earnings Surprises
Predicting an earnings surprise is normally a fools errand. You can get a slight edge by focusing on stocks that have a history of big earnings beats in at least decent market conditions. You can also focus on those quarters where stocks in the industry are really moving strongly higher after earnings.
However, I would rather trade the stock after the release in most cases.
If the stock has a great long-term chart, a big beat and raise and strong enough pre-market pattern, it may qualify under our earnings eruptions strategy.
A lot of studies have been done that have shown that there is no advantage to segmenting stocks into those that beat estimates versus those that do not.
However, this is if you are investing for the longer-term. When swing trading, its a completely different story.
One look at the long-term track record of our 3 Stocks to Wealth service on investtobefree.com will show the advantage we get by focusing on stocks beating earnings estimates with rising future expectations in great technical trends. Trend trading works, if done well, during most market conditions.
Earnings Surprise Strategies
For traders, earnings season is when the big money is made. For investors, its a crap shoot.
When a top stock beats earnings estimates by a significant margin, the stock tends to rally for a few days before pulling back if it gaps significantly higher. As long as it has other key technical and fundamental characteristics we look for.
The best stocks will then tend to form an earnings flag. If the price breaks out again, the price tends to take another somewhat smaller leg higher.
After that, the price may consolidate and break out again or it may fall into a new downtrend. But the advantage is generally over with within a few weeks. Most stocks tend to start pulling back within a few days.
The edge is only with those stocks with the strongest fundamental and technical factors leading into and just after the big earnings surprise. We might trade just 5 to 15 big beats each quarter.
Of course, we only trade these big earnings events in market conditions that are good enough. Just before and during a bear market, fund managers tend to sell the news and use the earnings pop to sell at a higher price right away.
ROKU Stock Forecast for 2020
We predict that ROKU will either go up or go down in 2020 and we will make money in either case.
Its a bold forecast I know :). But my point is that a lot could happen to ROKU in the months and years ahead.
Maybe Netflix and Disney will cut ties with ROKU. Maybe the often maligned cable companies will offer better perceived content value to cord cutters who would rather die young than give up high speed internet.
Perhaps another platform will become more popular while ROKU privacy issues are brought up in Congress.
Maybe North Korea will launch a scud missile from a submarine that will land precisely on ROKU’s headquarters. Who knows?
Should you Buy ROKU Stock?
However, if ROKU sets up a strong consolidation pattern and reaches a good technical entry point with all the factors we look for (which professors with their plain jane studies have no clue about), we will be all over it again.
If not ROKU this month, multiple other top growth stocks will. If the earnings event and technical factors meet all of our requirements, the stock has a great chance of making us a lot of money again in a short time-frame.
Will it be higher a few months from now? That is a much tougher call to make in my opinion. Similar to forecasting the destination of a scud missile and the move right after earnings with a weaker gap, pre-market pattern and long-term pattern.
Swing Trading Strategies for Q3 Earnings
So far we are seeing some good signs ahead of Q3 earnings season. We just saw SNX qualify under our earnings eruptions strategy rules. The price reached the entry point and then immediately surged 7% higher the same day.
The best news is that the price did not pull back hardly at all after reaching the technical entry point. This is key.
When trading, we want trading opportunities with a lot of upside potential and a high win rate while using a tight stop-loss. The earnings eruptions strategy delivers.
Other stocks nearly met the criteria in the strategy and had very clean breakouts as well. This is a good sign.
I think this quarter will see a big divide between the winners and losers. If the company misses estimates or lowers guidance, look out below.
If its a stock in a great long-term trend that beats and raises, it could take off for days. Yesterday we saw RNG reach a great entry point out of a large double bottom pattern.
It was another stock that reached a good technical entry point with a catalyst that held a very tight stop-loss after reaching the technical entry point. These are good signs heading into earnings season.
The researchers are right. Simply buy and hold stocks that beat earnings estimates and you will have no significant advantage over the overall market.
However, if you swing trade (holding from a few hours to a few weeks) the best stocks with the largest earnings surprises in the best technical patterns, its a different story. In fact, this is where we make the big money swing trading ROKU and other top stocks.
Trade them without a great trading plan and you will likely spin your wheels.