These 7 Stocks Deserve A Closer Look Before Earnings

If you’ve used my Portfolio Grader tool or have kept up with this blog, you know that I put a lot of weight on what analysts are saying about any given stock. And an effective way to judge how the analyst community feels about a stock is tracking their earnings estimates for the quarter.

Upward revisions are an important indicator of a company’s future success. You see, analysts are paid to estimate a company’s earnings outlook. If an analyst makes a wrong estimate that ends up costing investors money, that analyst could be out of a job. If a number of Wall Street analysts start to move their forecasts higher, it’s a good bet that the stock will outperform expectations and deliver market-beating returns to investors since positive revisions are never made lightly.

I know that I usually focus on sales and earnings growth when these reports come out. But now that we’re in the swing of third-quarter earnings season, we’re seeing interesting analyst activity regarding some of the hottest names on Wall Street. While the market may have not reacted to these upgrades just yet, I want you to be prepared for what’s to come for the impending earnings season.

To get to the point, here are six companies that have the analyst community buzzing, and they should be on your radar as well.

  • Applied Optoelectronics (AAOI): Over the past 90 days, analysts have revised the consensus EPS estimate up from $0.84 to $1.14, a 35.7% increase. As it stands, analysts are forecasting 612.5% annual earnings growth and 99.5% annual sales growth. Then again, Applied Optoelectronics will likely do even better, given its strong track record of earnings surprises.
  • Applied Materials Inc. (AMAT): Over the past 90 days, analysts have hiked up their EPS estimates from $0.66 to $0.84, a 27.3% increase. The consensus estimate is calling for 68% annual earnings growth and 30.7% annual sales growth.
  • Broadcom Ltd. (AVGO): Over the past 30 days, analysts have revised the consensus EPS estimate up from $3.68 to $4.03. The current estimate is for 39.4% annual earnings growth and 17.2% annual sales growth.
  • Lam Research Corp. (LRCX): Over the past 90 days, the consensus EPS estimate has jumped from $2.65 to $3.04, a 14.7% increase. Analysts are calling for 68.9% annual earnings growth and 50% annual sales growth.
  • MKS Instruments Inc. (MKSI): Over the past 90 days, the consensus EPS estimate has risen from $1.08 to $1.41, a 30.6% increase. Analysts are forecasting 95.8% annual earnings growth and 43% annual sales growth.
  • Weibo Corp. (WB): Over the past 60 days, analysts have revised the consensus EPS estimate up from $0.29 to $0.36, a 24.1% increase. The current estimate is for 125% annual earnings growth and 68% annual sales growth.
  • Western Digital Corp. (WDC): Over the past 90 days, the consensus EPS estimate has jumped from $2.11 to $2.78, a 31.8% increase. The current estimate is for 251.9% annual earnings growth and 37.7% annual sales growth.

To put these earnings estimates into perspective, analysts forecast that the S&P 500 will post 6.6% year-over-year earnings growth this quarter. This means that each of these stocks are outperforming the majority of stocks in the market and are well-positioned to continue to beat the odds in the third quarter, which will kick off with Alcoa Inc.’s (AA) earnings report on July 19.

If you want to see how the analyst community feels about one of your holdings, feel free to run it through my Portfolio Grader screening tool. After hitting “submit,” you’ll see that one of the components of the stock’s Fundamental Grade is “Analyst Earnings Revisions.”

Sincerely,

Louis Navellier

Louis Navellier

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