Earnings season is just around the corner, and we have a lot of work to do.
If you use my Portfolio Grader tool or keep up with this blog, you know that I put a lot of weight on analyst sentiment. And a telltale sign of analyst sentiment is whether this quarter’s earnings estimate is rising, or falling.
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.
So, positive revisions are never made lightly. When Wall Street analysts increase their earnings forecasts, they’re still being conservative. They know that the company has tremendous profit potential, but they’re still playing it safe. In other words, upwards revisions are a good sign that the company will beat expectations.
These earnings winners typically deliver market-beating returns to investors.
As we approach second-quarter earnings season, analysts are boosting their forecasts for some of the hottest names on Wall Street. While the market may have not reacted to these upgrades yet, I want to prepare you for what’s to come this earnings season.
Yesterday, I prepared a list of all the big earnings reports that are coming out in July. Today, I’ve skimmed the crème de la crème of this list. For your viewing pleasure, here are several companies that have the analyst community buzzing. They should be on your radar too…
5 Stocks That Have Analysts Buzzing
- Align Technology, Inc. (ALGN): Over the past 90 days, analysts have hiked up their EPS estimates from $1.03 to $1.09, a 5.8% increase. The consensus estimate is calling for 32.4% annual sales growth and 28.2% annual earnings growth. Align Technology’s Q2 earnings report will be released on Wednesday, July 25. ALGN is an A-rated Strong Buy.
- ConocoPhillips (COP): Over the past 90 days, the consensus EPS estimate has jumped from $0.67 to $1.04—a 55.2% increase. Right now, analysts are calling for 10.0% annual sales growth and a whopping 621.4% annual earnings growth. ConocoPhillips will be announcing second-quarter results on Thursday, July 26. COP is an A-rated Strong Buy.
- The Progressive Corp. (PGR): Over the past ninety days, the consensus EPS estimate has jumped from $0.83 to $1.09—a 31.1% increase. The consensus estimate is for 19.1% annual sales growth and 81.4% annual earnings growth. Progressive’s Q2 earnings report is just around the corner, on Tuesday, July 17. PGR is a B-rated Buy.
- NVIDIA Inc. (NVDA): Over the past ninety days, the consensus EPS estimate has jumped from $1.48 to $1.66—a 12.2% increase. The consensus estimate is for 39.2% annual sales growth and 80.4% annual earnings growth. NVIDIA is expected to announce its second-quarter results sometime in early August. NVDA is an A-rated Strong Buy.
- Twitter, Inc. (TWTR): Over the past 90 days, analysts have revised the consensus EPS estimate up from $0.12 to $0.17, a 41.7% increase. The current estimate is for 20.7% annual sales growth and 100% earnings growth. Twitter will post its second-quarter results on Friday, July 27. TWTR is an A-rated Strong Buy.
According to FactSet, analysts expect the S&P 500 will post 20.0% annual earnings growth and 8.7% annual revenue growth. This means that each of the above stocks are outperforming the broader market.
If you want to see how the analyst community feels about one of your holdings, simply 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.”
This earnings season, I recommend you stick with companies that have positive analyst earnings revisions. These experts are paid to track these stocks closely. Following their lead will help you select stocks that are primed to do well this earnings season.