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How to Boost Your Portfolio with Top Consumer Staples Stocks Set to Beat Earnings
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Hershey?
The final step today is to look at a stock that meets our ESP qualifications. Hershey (HSY - Free Report) earns a #3 (Hold) one day from its next quarterly earnings release on May 3, 2024, and its Most Accurate Estimate comes in at $2.76 a share.
Hershey's Earnings ESP sits at +0.87%, which, as explained above, is calculated by taking the percentage difference between the $2.76 Most Accurate Estimate and the Zacks Consensus Estimate of $2.74. HSY is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
HSY is one of just a large database of Consumer Staples stocks with positive ESPs. Another solid-looking stock is Colgate-Palmolive (CL - Free Report) .
Colgate-Palmolive, which is readying to report earnings on July 26, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $0.87 a share, and CL is 85 days out from its next earnings report.
For Colgate-Palmolive, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.87 is +0.17%.
Because both stocks hold a positive Earnings ESP, HSY and CL could potentially post earnings beats in their next reports.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>
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How to Boost Your Portfolio with Top Consumer Staples Stocks Set to Beat Earnings
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Hershey?
The final step today is to look at a stock that meets our ESP qualifications. Hershey (HSY - Free Report) earns a #3 (Hold) one day from its next quarterly earnings release on May 3, 2024, and its Most Accurate Estimate comes in at $2.76 a share.
Hershey's Earnings ESP sits at +0.87%, which, as explained above, is calculated by taking the percentage difference between the $2.76 Most Accurate Estimate and the Zacks Consensus Estimate of $2.74. HSY is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
HSY is one of just a large database of Consumer Staples stocks with positive ESPs. Another solid-looking stock is Colgate-Palmolive (CL - Free Report) .
Colgate-Palmolive, which is readying to report earnings on July 26, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $0.87 a share, and CL is 85 days out from its next earnings report.
For Colgate-Palmolive, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.87 is +0.17%.
Because both stocks hold a positive Earnings ESP, HSY and CL could potentially post earnings beats in their next reports.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>