Stocks Continue To Rally On Earnings; Headwaters and Waste Management Shares Jump On Positive Reports

Stocks are trading higher on Tuesday, boosted by positive earnings and deal news. General Motors, the largest U.S. automaker reported a profit, and Sun Microsystems reported a bigger-than-expected profit. Meanwhile, Alcatel-Lucent reported a surprising loss.

Among the premarket movers this morning are a number of stocks with attractive PowerRatings (for Investors). A PowerRating of 10 is highest, and our data from 1995 through 2006 show that stocks with high PowerRatings have historically outperformed over the next twelve months. Below are the price movement in premarket trading. The theme this morning for all three stocks was strong earnings and weak guidance. All three stocks are trading lower in premarket activity. But since these stocks all have attractive PowerRatings, this morning's weakness could be a short-term pullback that signals a buying opportunity.

• Headwaters Inc. (HW@HW | Quote | Chart | News | PowerRating) is up 13.6% on Tuesday morning to $17.02. The provider of general building materials reported third quarter net income of $46.4 million, $0.98 per share, up from $27.4 million, $0.58 per share in the same quarter last year. Analysts predicted earnings of $0.50 per share. Headwaters lifted its earnings per share outlook to $2.35 - $2.50 from its prior range of $1.60 - $1.80.

  Headwaters has a market cap of $634 million and its shares are down 37% year-to-date. HW has a high PowerRating of 9.
   

• Sonic Automotive Inc. (SAH@SAH | Quote | Chart | News | PowerRating) is up 8.5% on Tuesday to $28.45 and has a high PowerRating of 8. Sonic Automotive, Inc. revealed a surge in second quarter net earnings from continuing operations to $29.979 million or $0.65 per share from $17.848 million or $0.41 per share last year. Quarterly net income increased to $26.368 million from $12.188 million in the previous year.
  
  On average, 8 analysts polled by First Call/Thomson Financial expected the company to earn $0.64 per share.
  
  The company raised its forecast for full year 2007 earnings per share from continuing operations to a range of $2.50 to $2.60, excluding impact of unannounced acquisitions. Earlier, the company was expecting in a range of $2.48 to $2.58 per share. Analysts are expecting $2.59 per share in the range of $2.53 to $2.70 per share.
  
  The Board has authorized an additional $30 million share repurchase.
   
• Waste Management Inc. (WMI@WMI | Quote | Chart | News | PowerRating) shares added 7.2%  to $40.19. Waste Management Inc., a provider of integrated waste management services, posted a drop in second quarter net profit, as the year-ago results benefited from a huge tax audit settlement. But adjusted profit grew year-over-year on improved operating profit margin. Operating revenues for the quarter slipped from last year, negatively impacted by the company's execution of its strategy to divest under performing operations and accounts. Further, the company raised its guidance for full year 2007.
  
  WMI's PowerRating is 8 and the company's market cap is $20.5 billion.