If you're looking for stocks that are setting up in a base ahead of their next earnings report, here's one that fits the bill: IBD 50 member Synopsys. It's expected to release its latest numbers around Aug. 17 and is trading approximately 2% under a 377.70 entry. The base is a first-stage consolidation.
Understand that buying just before a stock reports can be risky, since an EPS or sales miss could send it sharply lower. You can minimize your exposure by waiting to see the actual numbers and the market's reaction. Using an options strategy during earnings season is another way to put yourself in a position to profit, while minimizing the potential downside.
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Synopsys reported 47% earnings-per-share growth last quarter, while sales growth came in at 25%.
Analysts expect earnings growth of 9% for the quarter, and a 24% gain for the full year.
The company has a 97 Composite Rating and earns the No. 2 rank among its peers in the Computer Software-Design industry group. PDF Solutions is the No. 1-ranked stock within the group.
Note: Dates for earnings reports are subject to change. Check the company's website for any updates.
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