3 Stocks for This Earnings Season

The Fourth of July is behind us now and we will be moving into the second half of the year. I have heard a lot of negative talk in the media lately about the stock markets prospects for the rest of 2014 but I am pretty excited about our prospects. We saw fantastic numbers on the job from last week and all signs point towards continued economic improvement. It won’t improve fast enough for the Fed to change their low interest rate stance until sometime next year at least and this could give us a long lasting sweet spot for the continued advance of the stock market. With the stock market at new highs I do not see the kind of enthusiasm and euphoria about the markets that have market important past market tops and it looks like we can go higher still in the rest of 2014.

This week we get the kickoff of earnings season when Alcoa (AA) reports on Wednesday. From then on it will be a fast and furious few weeks as we get a look at the results of corporate America in the second quarter of the year. All the indications are right now are that this could be a fantastic earnings quarter and as always I expect our stock to lead the way with above average sales and earnings growth. According to the research service fact set the consensus estimate of for profits of S&P 500 companies in the second quarter is 4.9% but I expect the results from the stocks ranked strong buy in Portfolio Grader will be much higher than that.

As we enter earnings season it is critical that yare locked and loaded with the very best stocks in your portfolio. You want to own companies that have shown the ability to grow revenues and profits at above average rates. You want stocks that have seen upgrades by the Wall Street analyst community as they scramble to catch up with the company’s success. You want have a portfolio full of stocks where the company had a proven ability to post upside earnings surprises that catch the attention of large investors and gain buying pressure that pushes the stocks higher. In short you want to own those stocks that have the characteristics to gain a strong buy rating in Portfolio Grader that offer the best of the best fundamentals.

Here are 3 strong buy rated stocks to get you started with locking and loading your portfolio for earnings season.

Trinity Industry (TRN) makes a wide use of products that are used in the transportation, energy and construction industries. Trinity makes rail cars, utility structures, wind towers and inland deck barges among other things. They recently bought Meyers Steel Structures to broaden their offerings in utility steel structures and further diversify away from being just a railcar company. Business has been fantastic for the company so for this year with earnings up 46% so far. The second quarter should bring strong results as well. Analysts expect Trinity to report 26% revenue growth year over year and profits are expected to rise by 42%. They could be low as the company has reported four consecutive positive earnings surprises and analysts have been raising their estimates for the quarter.

United Insurance Holding Corporation (UIHC) has been having a great year so far with profits rising by 38% so far. The company writes residential property and casualty insurance in a limited number of markets including Florida, Massachusetts, New Jersey, North Carolina, Rhode Island, South Carolina, and Texas. It looks like to good times will continue as analysts expect United to report sales growth of 50% and earnings year over year growth of almost 40%. The company has reported two consecutive huge earnings surprises as Wall Street underestimates this company earnings power.

Monolithic Power Systems (MPWR) makes semiconductor that are used in a wide range of application including consumer electronics, communications as well as industrial and automotive markets. Their chip convert and control power systems for devices and chips that provide lighting control for backlighting screens. Business has been great and in the past year earnings have grown by over 35%. The goof times should continue as Monolithic Power is expected to see sales gains of 16% and profit growth year over year of 45%. That may well be low as the company has posted four consecutive positive earnings surprises.

Earnings season is here and the outlook for both the market and the economy is pretty bright right now. Even though the 4th of July is over I expect to see some fireworks from the highly-rated stocks that have the best of the best fundamentals that earn an A ranking in Portfolio Grader.


Louis Navellier

Louis Navellier

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