2 Stocks that Could Rally After Earnings

Shares of Toll Brothers and Take-Two Interactive are looking to gain after earnings once again

May 22, 2017 at 10:50 AM
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We're near the tail end of earnings season, but some notable companies are still left to report quarterly results. Two stocks we'll be watching this week are homebuilder Toll Brothers Inc (NYSE:TOL) and video game developer Take-Two Interactive Software, Inc. (NASDAQ:TTWO). Both companies are set to report earnings before the opening bell tomorrow, and history suggests shares of TOL and TTWO could be set to rally after the events. 

Options Traders Bet on Another Post-Earnings Rally for TOL Stock

Toll Brothers stock earlier today notched an annual high of $38.29, which brings its 12-month advance to over 41%. The shares have been extremely strong around quarterly earnings reports, too, moving higher in the session after such events in five straight quarters. Last quarter, TOL shares jumped 6.1% in their post-earnings session, and the options market is pricing in an 8% swing for tomorrow, regardless of direction. 

Options data suggests traders are expecting an upside move stock, too. Toll Brothers has a 10-day call/put volume ratio of 3.30 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), meaning call buying has tripled put buying over the past two weeks. Analysts are also bullish, with 80% recommending to buy TOL stock. 

toll brothers stock

TTWO Stock Searches for Higher Highs

Take-Two Interactive stock has also been a long-term winner on the charts, surging 89% year-over-year to trade at $69.01, touching a record high of $70.53 on May 17. The shares have not moved lower after earnings since August 2015, and in the session after last year's May release, they jumped 4.5%. This time around, options traders are pricing in a move of 8.8%. 

Options bulls have been busy on TTWO shares, as well. Data from the ISE, CBOE, and PHLX shows a 10-day call/put volume ratio of 6.73, which ranks in the 75th annual percentile. As for analysts, nine out of 12 rate Take-Two Interactive stock a "strong buy." 

take two interactive stock


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