Quick-Hit Earnings Trade: How to make 15% profit in two days

August 18, 2009

Dear Fellow Investor,

Last week’s recommendation American Dairy (ADY) was the definition of a Quick-Hit Earnings Trade. In my buy advice, I mentioned that this stock was reporting earnings within 24 hours, and you had to act immediately to get in on the profits. Those of you who moved quickly were rewarded handsomely as shares raced up 15% in just two days!

This week, I have another stock that is going to release its quarterly numbers very soon. The window of opportunity is a little bit larger, but don’t delay because this standout consumer staples stock will post blowout earnings in just two days!

The name of this hot new stock is Lancaster Colony Corp. (LANC). Let me tell you all about it!

Quick Hit Trade #5: Lancaster Colony Corp. (LANC)

Lancaster Colony (LANC) has been around since 1961 when several small glass-making businesses merged together to form one big company. Since Lancaster went public in 1969, the company's specialty foods and glassware divisions have been thriving. Lancaster has made quite a name for itself, as it's almost impossible to find a grocery store that doesn't carry at least some of this company's products. The success of these specialty brands helped Lancaster post sales in excess of $1 billion back in 1998, and the company has continued to grow ever since.

In its latest quarter, Lancaster Colony’s earnings rose 153.3% to $21.2 million or 76 cents a share, compared with $62 million or 30 cents a share in the same quarter a year ago. During the same period, the company’s sales rose 6.6% to $246 million compared with $230.8 million. Lancaster’s operating margins continue to expand impressively, which is why its earnings growth is so much stronger than sales. Remember, operating margin growth shows that a company is demanding higher prices from its products while it is keeping costs down—a great sign of efficiency and strong demand.

Lancaster Colony will offer its next quarterly report August 20—that’s in just 48 hours. The company has seen several upwards revisions to estimates recently, and that typically is an indication that the company will exceed expectations handsomely. Buy this stock immediately to benefit from the pending earnings bounce!

NEXT UP: Trading instructions on our other Quick-Hit Trades.