Trade Alert: Buying Powell’s Earnings Drop
A short-term recovery trade on an electrical-infrastructure supplier, plus two biotech catalyst bets.
A Record Backlog Meets A Falling Stock
Powell Industries (POWL) fell sharply after Monday’s report even though the business continues to expand. Powell supplies custom-engineered systems and equipment used to manage, control and distribute electrical power, including switchgear, packaged power rooms and other equipment needed by utilities, data centers and heavy industry.
We’ve traded Powell several times before. Last August, the shares also fell after earnings, and we used that decline to enter a bullish trade that eventually returned 586% on premium outlay.
The company’s latest report gives investors plenty to digest. Revenue increased 9% and net income increased 8%, while new orders rose 158% to a record $934 million. Backlog reached a record $2.4 billion, up 69%. The quarter included a data-center order worth more than $400 million, and management cited increasing demand for data centers and related AI capacity among the company’s durable growth drivers.
With the shares down after those results, we’re placing a short-term call calendar that can benefit if POWL makes even a modest recovery over the next several weeks, as investors look past the initial disappointment and focus on the backlog, earnings growth and continuing AI infrastructure buildout.
Three Trades, Three Near-Term Catalysts
All three trades in today’s alert are short-term. The second revisits a biotech from our Multibaggers X list—a curated group of accounts from our Market Watchers X list with multiple recent 100%+ winners. Yesterday’s order didn’t fill, so today we’re using a different structure better suited to a large move.
The third is another biotech that appeared among last night’s Portfolio Armor top names. We’ve seen examples in the past where stocks that entered our Top Ten and released earnings that same week spiked after their reports. We want to be positioned ahead of that possibility in trade with asymmetric upside potential.
The structures match the catalysts: a recovery calendar for Powell, a call spread for the binary biotech and a diagonal calendar for the earnings Top Name. Paid subscribers will find the names, exact structures, maximum entry prices and exit plans below.
Today’s Top Names Trade
RAS-targeted oncology / earnings catalyst
RSI: 51; Chartmill Technical Rating: 9; Setup Rating: 8; Fundamental Rating: 2 (we note these stats in trade alerts and in spreadsheets to track how well they correlate with trade performance).
