3 Earnings Reports That Confirmed Investors Should Buy

Sometimes a company's quarterly report gives confirmation one way or the other about the health and prospects of the business. For this reason, investors often wait until after hearing about the recent results and outlook to make a buy or sell decision.

In the past week, there have been several company reports that have solidified their bullish investment cases. Whether it be about surging sales or investments made for future growth, these three corporate check-ins told us that it’s a good time to buy.

What is Driving Growth at Broadcom?

Broadcom (NASDAQ:AVGO) continues to assert itself as a leader in the semiconductor space. The chipmaker for wireless communications and data center solutions put up another strong quarter last week.

Fiscal fourth-quarter revenue rose 12% and adjusted earnings jumped 18%. Both topped the analyst consensus.  Broadcom's recent performance is largely tied to the effects of the pandemic, but it is no flash in the pan.

Increased demand for Broadcom's data center and storage products to power remote workforces around the world has been a huge tailwind for the company. And with many of its enterprise customers still operating remotely and contemplating new work arrangements in the wake of COVID-19, this tailwind is likely to remain in place.

Data traffic is also expected to remain elevated due to the high number of students learning from home, increased social interaction on Zoom and other platforms, and the prevalence of streaming television and video game usage.

Still, much of Broadcom's growth has come via the inorganic route. Formerly Avago before taking on Broadcom (and its name) almost six years ago, the company has also attained scale by buying out LSI Logic, Brocade, and others. This has given it a steadily increasing product lineup to meet the rapidly evolving needs of its diverse end markets.

Broadcom's semiconductor business is in the early stages of a major growth opportunity due to the advent of 5G mobile phones. This combined with accelerating demand for data center products in the post-pandemic world should make Broadcom a well-balanced growth machine over the next few years.

Aside from the growth opportunities, Broadcom also offers one of the largest dividend yields(3.1%) in the technology sector. It paid out 70% of earnings as dividends over the last 12 months and has raised its dividend in each of the last nine years.

Is Johnson Outdoors' Product Demand Sustainable?

Late last week Johnson Outdoors (NASDAQ:JOUT) reported that fiscal fourth-quarter revenue soared 58% to $164.7 million. The maker of outdoor recreation equipment, watercraft, and marine electronics recorded EPS of $1.53 which was also well above the prior year period.

What's behind the sudden surge in product demand? Well, quite frankly, people are sick of being stuck indoors. Consumers have been clamoring for camping and fishing gear and new watercraft toys to relieve stress and get a change of scenery during the pandemic.

Johnson Outdoors' ability to leverage its e-commerce platform has given it a formidable sales outlet to complement its storefront growth. The double threat is generating strong cash flow and even enabled the mid-cap leisure company to boost its dividend this year.

Fortunately for Johnson Outdoors, there will probably be some lasting effects on demand for its adventure-filled products. Not only are existing outdoor enthusiasts spending mightily, but a new breed of folks looking to try out camping, fishing, and other activities for the first time is quickly expanding Johnson's customer base. Whenever you hear management say, "the challenge has been keeping pace with demand", this is usually the sign of a strong business.

Perhaps the best part for investors, is that the best may be yet to come. That’s because Johnson's fiscal second and third quarters are its seasonally strong periods. With COVID-19 cases surging and potential lockdowns looming, we could be homebound for the better part of 2021. And even as people resume traveling, this can only help demand for Johnson's recreation products.

Another thing to like about this company is the lack of debt on its balance sheet. The fundamental quality along with increased consumer attention on the outdoor recreation space, makes Johnson Outdoors a big catch for investors.

Why is Vail Resorts Stock Up Despite Bad Earnings?

Staying with the great outdoors, Vail Resorts (NYSE:MTN) is also looking like a good buy here. Although its latest results missed on the top and bottom line, there appear to be better times ahead for the ski resort company.

Despite posting 51% and 63% declines in revenue and earnings, respectively, Vail shares are approaching their $302.76 all-time high of September 2018. The rapid ascent towards the peak of Vail's price chart may seem counter-intuitive given that its properties have been closed or restricted for much of the year. But we have to remember that the market is forward-looking.

Looking further down the slopes, investors are banking on pent-up demand for ski vacations to drive better results at Vail. By 2022, the market has priced in record sales of nearly $2.4 billion and sharply higher earnings off a weak base. Vail's balance sheet also puts it in a good position to survive the economic downturn with an increasing $462 million in cash.

In the meantime, Vail is investing in its resort properties to drive business to its North American slopes next winter. This includes investments in ski area expansions, new high-speed lifts, and other infrastructure designed to generate customer traffic. And Vail's portfolio extends well beyond the U.S. borders. It also has a growing presence in Canada, Japan, and Europe.

Today Vail Resorts is a power player in the ski business. Last year it acquired Peak Resorts to add 17 popular ski destinations to its portfolio. It is also more than just skiing. It operates the RockResorts luxury hotels and owns expensive condominiums situated around its ski resorts.

As travel restrictions ease and people take to the slopes for much-needed getaways, Vail Resorts is expected to be in a great position to absorb the spike in demand. In anticipation, its stock price will likely continue to climb up the mountain to new highs.