Steward Enterprises: Long Earnings Trade: There are more than 35m Americans over the age of 65, the most there’s ever been. But by 2030 there will be more than 70m Americans over the age of 65. Sadly, the need for funeral services will be greater than ever. Stewart, which owns over 221 funeral homes did two $25 million dollar buybacks in the mid-$8 range, has helped reduced its current shares outstanding, which should help this quarter’s earnings. At $2.5 cents, trading with a forward P/E of 6.28, Steward is likely to “pop” after its earnings

3Com: Long Earnings Trade: I’ve written about 3Com as an earnings trade for the past two quarters—both times where winners and here is why. The stock moved 20% higher intraday when it last reported earnings. Last year, private-equity firm Bain Capital and Chinese-based Huawei Technologies proposed a $2.2 billion deal, which was rejected by the U.S government over concerns that sensitive military technology could be compromised by the Chinese government. The market has totally forgotten that on Aug. 5, 3Com raised its forecast for the fiscal first quarter to $335 million to $340 million, compared with the previous estimate of $325 million to $330 million. The company also expects its non-GAAP earnings per share to be in the range of 6 cents to 8 cents, compared with the prior view of 3 cents to 5 cents. 3Com seems like a good risk/reward trade ahead of the quarter. Last quarter, quarterly net profit was $79.8 million, or 20 cents a share, compared with a net loss of $18.7 million, or 5 cents a share, in the year-ago quarter. CEO Bob Mao said: "In today's tight economy, we are seeing clear signs of a fly to value, as customers look to get more for their networking dollars." Furthermore, 3Com management issued a $100 million dollar buyback last quarter.

Titan Machinery: Short Earnings Trade: I’d actually short shares of Titan Machinery ahead of their quarter Monday night. With the recent weakness in Cummins and Deere guidance, Titan, which is a full service agricultural and construction Equipment Company will not be immune to the sectors mammoth slowdown. Furthermore, the company trades with an EV/EBITDA of 10.084 and forward P/E of 13.11---all of which can be classified as extreme’s in terms of valuation. For the 2nd quarter 08’ Titan only reported profit margins of 1.75% on operating margins of 4.42%, couple in the weakest farming season in years, and the fact that creditors are no longer lending to Farmers, it’s safe to speculate that these margins should be substantially weaker. I fully expect the company to cut their 09 earnings outlook Monday night as well.

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