Amazon (AMZN) has a history of choppy profits, but late Thursday the e-commerce and cloud-computing giant delivered yet another quarter of accelerating earnings growth and revenue gains. IBD 50 stocks SVB Financial (SIVB), Twitter (TWTR), Mastercard (MA), SolarEdge Technolgies (SEDG) and Ilumina (ILMN) also boast at least two quarters of faster sales and earnings growth.
Amazon is not an IBD 50 stock but it already boasts a best-possible 99 Composite Rating. The Composite Rating combines several proprietary IBD ratings into a single score. All-time stock winners often have a Composite Rating of at least 95 near the start of their big runs. SVB Financial and SolarEdge Technologies also have 99 Composite Ratings. Twitter and Mastercard have 98 CRs while Ilumina boasts a 97 CR.
Accelerating earnings growth is an extremely bullish trait. Ultimately earnings drive stock gains. Faster profit gains show that a company has real momentum. The faster sales growth suggests real demand, not just cost-cutting or accounting games.
Amazon
Amazon reported earnings per share of $3.27, more than double analyst forecasts. Year-over-year, EPS rose 121%. That was the third straight quarter of accelearting earnings growth after 40% in Q4 2017, 0% in Q3 and -78% in Q2. Sales growth accelerated for a fifth straight quarter, sprinting 43% to $51.04 billion.
Being able to ramp up growth rates despite massive size is especially impressive. And Amazon isn’t done. Looking to Q2, analysts see a massive 485% EPS gain.
Of course, Amazon could have had solid, consistent profit growth years ago, but CEO Jeff Bezos focused on efforts to boost sales and market share. That’s paying off. After recently revealing that Prime memberships have topped 100 million worldwide, Amazon said Thursday that it will hike its Prime fee $119 a year.
Amazon stock shot up to a record 1,638.10 Friday morning, but faded to 1,572.62. Intraday, Amazon cleared a 1,617.64 cup base buy point but closed below that level. It did settle above an alternate entry from a 1,568.62 flawed cup-with-handle pattern. But investors probably should wait for the stock to move back above Friday’s high as a buying opportunity.
Keep in mind that Amazon is in a very late-stage base, after several big moves in recent years. Late-stage breakouts are less likely to be big winners and more likely to fail outright.
The social network early Wednesday reported adjusted earnings of 16 cents a share, up 129% vs. a year earlier. Twitter’s earnings growth has accelerated for 5 straight quarters, from -31% to -22% to 0% to 11% to 73% to 129%.
Revenue rose 21% vs. a year earlier to $655 million. It was the best sales gain in two years, and the fourth straight quarter of improving year-over-year changes.
Twitter shares shot up before Wednesday’s open, but the stock quickly fell sharply in the regular session after CEO Jack Dorsey warned that growth would likely slow later in the year.
The stock fell 9% last week to 29, well below its 50-day line as it works on a consolidation.
SVB Financial
SVB Financial, parent of Silicon Valley Bank, late Thursday reported 90% earnings growth as revenue leapt 34% to $575 million. The $3.63 EPS was 50 cents above estimates while revenue was $39 million over views.
SVB Financial’s earnings and revenue growth have accelerated for five straight quarters. Silicon Valley Bank’s parent also raised full-year guidance, citing faster growth in loan and deposit balances and net interest income.
Unlike Amazon or Twitter, SVB Financial did not pare or reverse its initial post-earnings gains. The stock shot up 19% to 305.61 on Friday, gapping beyond a seven-week cup base entry of 271.89, MarketSmith analysis shows.
Because SVB Financial opened at 300, more than 5% past the standard entry, that’s a breakaway gap. A breakaway gap opening price is an alternative entry point.
Mastercard
The credit and debit card giant has reported two straight quarter of accelerating earnings growth and three quarters of faster sales growth, with year-over-year gains 33% and 20%, respectively.
Mastercard’s streak may be coming to an end. The card giant reports May 2. Analysts expect EPS to jump 25% to $1.26 on revenue up 18% to $3.25 billion, which would be strong but decelerating growth.
Shares of Mastercard are trading within a flat base with a 183.83 buy point. The stock closed Friday 175.94, just below its 50-day line.
Mastercard rival Visa (V,) also an IBD 50 stock, reported better-than-expected earnings last week, with EPS and revenue growth accelerating from the prior quarter.
Visa cleared a 125.54 flat-base buy point on Thursday, closing Friday at 126.01.
For Visa and Mastercard, recent trading history suggests that pullbacks to the 50-day or 200-day lines are better entries than traditional buy points from breakouts.
Ilumina
Ilumina has enjoyed four straight quarters of improving year-over-year earnings growth, trending from -11% to a 127% gain reported last week. Revenue growth has sped up for four quarters as well, from 5% to 31%.
Shares initially fell on Ilumina’s earnings, but rallied to close the week at 244.47, above their 50-day line. The genomic testing machine maker is in a flat base with a 256.74 buy point.
SolarEdge Technologies
SolarEdge Technologies has had three quarters of strong accelerating earnings growth, from -29% to 166%. Revenue growth has picked up momentum for the last four quarters, with a 70% gain in the last four periods.
The Israel-based company distributes solar power-harvesting components, like power optimizers and inverters, to solar companies.
The stock is well extended from a Feb. 15 breakout following the latest SolarEdge earnings report. Shares have consolidated for the past few weeks. The stock closed Friday at 53.10, finding support at its 50-day line in the past few sessions.
