EB Digest: Monday Edition

May 20, 2025

FEATURED ARTICLE

New Information, New Chart

Many times, after an excellent earnings report, we'll see a stock take an immediate jump higher (gap) and the demand is so great that market makers cannot slow the stock down.  First, you need to understand how the stock market works.  Market makers are like bookies for gambling.  They handle the "bets" on both sides of the trade, pairing buyers and sellers at a price point that's appealing to both.  When a company reports excellent earnings, and perhaps even raises future guidance, valuations of companies must be adjusted.  There's new fundamental information out and prices need to be "reset" to reflect not only the current excellent earnings report, but future earnings and earnings growth must then be reassessed to determine proper current valuation.

Enter Insulet Corp (PODD):

PODD's latest quarterly revenues easily surpassed consensus estimates, $569 million vs. $542 million.  Earnings per share came in 25% higher than expected, $1.02 vs. $.81.  This is a whole new set of numbers that Wall Street must now use to appropriately determine PODD's market value, given this new information.  Typically, in this type of situation, a stock will gap higher at the opening bell as demand pours in from retail traders.  Market makers, seeing this type of demand, raise the price of PODD the next morning, knowing that they (market makers) will be providing liquidity and taking short positions on PODD.  That usually results in PODD "filling the gap" initially back down to the prior day's closing price.  In PODD's case, however, prices continued to rise after the opening bell and keep rising as of this article.  This tells me there is tremendous demand for the stock and is a stock that we should consider owning.

Our Model Portfolio, which has crushed the S&P 500 since its November 19, 2018 inception, feasts on owning companies like PODD for 90 days, through the next earnings cycle.  Today, at 5:30pm ET, we will be "drafting" our Top 10 Stocks to include in our Model Portfolio over the next 90 days, looking to build on our dominance of the S&P 500.  This is a DO NOT MISS type of event, so please consider becoming an EarningsBeats.com member and joining us for a BIG night.  To top it off, we are still running a FLASH SALE that offers full annual membership benefits at 30% off our regular price, saving you $300!

Happy Trading!