NIKE, Inc. (NKE), Micron Technology, Inc. (MU): Three Attractive Stocks Following Earnings on Friday

Efficiency Could Lead to Gains Despite Current Loss

After a good start to 2013, shares of New York & Company, Inc. (NYSE:NWY) fell 8% on Friday after the company beat expectations and issued lower guidance than The Street had expected. Looking at its quarter, the company’s performance was very strong, but with weak February sales, the company expects growth in the low single digits.

New York & Company is a small-cap stock, with a market cap of $260 million. However, it’s a fairly large company with sales of almost $1 billion. NWY’s price/sales ratio of 0.30 compares favorably to other women’s specialty retailers such as Ann or Limited Brands. Basically, the company doesn’t need top-line growth, it needs efficiency, and this is a company that has been improving its bottom line.

The stock is currently trading with a forward P/E ratio of 19.05, meaning it’s expected to post its first year of profitability in four years. Therefore, I think New York & Company could be a nice investment on the weakness, possibly becoming a stock such as Christopher & Banks as it fundamentally improves.

Conclusion

When a stock trades drastically lower or pops significantly higher after earnings you must ask yourself a question “was the news worth the movement?” Far too often we make assumptions based on performance, but the best investors are able to use movement as an opportunity to capitalize on value. Therefore, as I’ve discussed often, when it comes to earnings, read the report first then assess the performance second, and you may find a good opportunity to invest.

The article Three Attractive Stocks Following Earnings on Friday originally appeared on Fool.com and is written by Brian Nichols.

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