Google and Earnings

Many important earning reports come out in the next few days. Here is my opinion on some.

1. Altira(MO) - Altria(which is really Phillip Morris) makes most of its money on smoking. Smoking is known as one of the three sins(Smoke, Drink, Gamble). These stocks tend to stay strong(drinking goes up) in times of recession/depression because smoking is an addiction, drinking is a feel good substance and gambling is a way to make your money back. Now, there is no such thing as a gambling stock because they are all resorts now that depend on tourism and obviously tourism is getting hammered(look at Las Vegas as proof), but I think smoking and Altria beat estimates. More important they should be highering their dividend and announcing the splitting of the company into domestic and international. A good stock to own before tomorrow.

2. Mastercard (MA) - Yes American Express was HAMMERED yesterday but the estimates for Mastercard have sandbagging written all over them. This is the easiest call in my life. Mastercard will DESTROY earnings and will give a better forecast of numbers then expected.

3. Amazon(AMZN)- Amazon has been hammered the last few months and I think any news will be good news. The estimates are low when compared to ebay and other similiary businesses. I think they will give good guidance as well. I would Own this stock.

4. Boeing (BA) - Boeing has won three major contracts in just the last two months, while the total revenue off those contracts will be spread out throughout the next year they will be enough to push them past estimates and should give them reason for a good forecast. I like this stock to jump 3-5% only.

5. Intuitive Surgical (ISRG) - Stock was the number one stock on the SP500 last year and has been hammered so far this year. Current price is 236.78 dollars. There is a good chance you will see a short squeeze before earnings but I think ISRG falls short. Stay away

And then there was Google

It is awfully hard to bet against Google but if there was ever a time it is now. I am not confident enough in their missing to say short the company but I would do something called long straddle or bearish put spread. Here is how they work,

1 Long Straddle - You pick a call option and a put option with the same strike price and expiration date. If the stock rises you just use the call and lose the put, if it drops you use the put and not the call. The only way to lose money is for the stock to stay pretty stable which Google won't do.

2. Bearish Put spread(This is what I am doing) - To do this you purchase higher striking in-the-money put options and selling the same number of lower striking out-of-the-money put options on the same underlying security and the same expiration month.

The thing with Google is that matching or beating estimates by a small amount is not good enough and thats what I see happening. The stock will drop but it could be a great time to buy if it enters the 400's on Friday intra-day.