PreMarket Prep Stock Of The Day: ZoomInfo

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

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If you want trading strategies for the upcoming trading day, PreMarket Prep is the broadcast for you. Between the hosts of the show and their guests, different setups are discussed in detail.

Certainly some are better than others, but the thought process behind them is extremely educational.

On Tuesday’s show, Jerremy Newsome of Real Life Trading outlined possible trades in ZoomInfo Tech. Inc. ZI, which is the PreMarket Prep Stock of the Day. The setup he shared is not the point — it's the rationale for the trade that is. 

The ZoomInfo Catalyst: After the close on Monday, the company reported quarterly earnings of 14 cents per share, which beat the analyst consensus estimate of 12 cents by 16.67%. This is a 100% increase over earnings of 7 cents per share from the same period last year.

The company reported quarterly sales of $174 million, which beat the analyst consensus estimate of $162.34 million by 7.18%. This is a 56.9% increase over sales of $110.9 million in the same period last year. 

The company raised FY21 guidance for adjusted EPS from a range of 49-50 cents to a range of 50-51 cents against a 50-cent Street estimate. Sales guidance was increased from $670-$676 million to $703-$707 million vs. a $676.5-million estimate. 

The ZoomInfo Setup: When the issue was beng discussed on the show, it was trading sharply higher (over $7) at the $62 area as a potential long.

What should be emphasized is that Newsome was not looking to buy the open in anticipation of some-profit taking early on. Instead, Newsome was going to “keep an eye on it all day.” 

The Actual ZoomInfo Trade: Newsome waited until late in the session and eventually took a long at $58 along with a $56 stop. He exited the trade with a profit after the stock failed to maintain the $60 level on the rebound that came to an abrupt halt after noon.

ZoomInfo shares ended Tuesday's session up 3.14% at $56.50. 

The full discussion on the issue from Tuesday’s show can be found below; the interview with Newsome begins at the 36-minute mark.