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3 Strong Buy Stocks With Attractive Earnings Growth

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The market has given little chance for investors to breathe throughout 2022. Coming out of a once-in-a-lifetime pandemic, we’ve found ourselves in a highly unique economic situation that has forced the Fed to become much more hawkish than in previous years.

This, paired with soaring energy costs, supply-chain bottlenecks, and geopolitical issues, has created a “no fun allowed” market landscape, with many companies witnessing double-digit valuation slashes throughout 2022.

Nonetheless, the market keeps rolling, and it’s vital for investors to find high-quality stocks. One stellar way of filtering out all of the bad apples is by utilizing the Zacks Rank.

Given the number of estimate revisions daily, investors may find difficulty determining which stocks to buy and which to steer clear from. The Zacks Rank alleviates this issue by helping investors harness the power of earnings estimate revisions and invest more successfully.

The Zacks Rank is a proprietary stock-rating model that uses trends in estimate revisions to classify all stocks into five groups - #1 (Strong Buy), #2 (Buy), #3 (Hold), #4 (Sell), and #5 (Strong Sell). The top 5% of all stocks obtain the highly-coveted Zacks Rank #1 (Strong Buy).

Zacks Rank #1 (Strong Buy) stocks should outperform the market more than any other rank. In fact, a portfolio of Zacks Rank #1 (Strong Buy) has beaten the market in 26 of the last 31 years with an average annual return of 25% compared to the S&P 500’s average return of 11.2%.

Let’s look into three companies – Occidental Petroleum Corporation (OXY - Free Report) , Steel Dynamics (STLD - Free Report) , and ON Semiconductor Corporation (ON - Free Report) – that all carry a Zacks Rank #1 (Strong Buy) paired with impressive earnings growth rates.

Occidental Petroleum Corporation

Occidental Petroleum Corporation (OXY - Free Report) is an integrated oil and gas company with significant exploration and production exposure. The company also produces a variety of basic chemicals, such as petrochemicals, polymers, and specialty chemicals.

Over the last 60 days, analysts have been rapidly upping their earnings outlook across the board quite significantly. The Consensus Estimate Trend has increased a massive 127% for the upcoming quarter, reflecting earnings growth of a triple-digit 775% from the year-ago quarter.

Additionally, the EPS estimate for current full-year earnings has surged by 99%, displaying a very sizable 290% growth in earnings year-over-year.

Zacks Investment Research
Image Source: Zacks Investment Research

Over its last four quarters, the company has acquired a double-digit average EPS surprise of 26%, and in its latest quarter, OXY exceeded EPS estimates by a notable 7.6%. Furthermore, the company’s bottom line is expected to increase by nearly 33% over the next three to five years.

Revenue growth appears solid as well. For the upcoming quarter in August, the $9.6 billion Zacks Consensus Sales Estimate displays a 60% expansion in the top line, and full-year sales estimates of $37 billion reflect a double-digit year-over-year growth in the top line of 41%.

Steel Dynamics

Steel Dynamics (STLD - Free Report) is among the leading steel producers and metal recyclers in the United States. The company is one of the most diversified steel companies in the United States, with a vast range of specialty products.

Analysts have been positively revising their earnings estimates across the board over the last 60 days, which is a very bullish signal. The $5.08 per share estimate for the upcoming quarter displays a substantial 50% expansion of the bottom line compared to the year-ago quarter.

Additionally, the Consensus Estimate Trend for the current full-year earnings has increased by 34% and displays a sizable 33% growth in earnings year-over-year.

Zacks Investment Research
Image Source: Zacks Investment Research

Over its last four quarters, STLD has acquired a respectable 2.5% average EPS surprise, and in its latest quarter, the company beat EPS estimates by nearly 8%. Additionally, the company has chained together ten consecutive EPS beats dating back to September 2019.

Top line estimates are also looking robust as the $5.6 billion quarterly revenue estimate displays a 25% expansion in quarterly revenue from year-ago sales of $4.5 billion. Furthermore, full current year sales estimates sit at $21.6 billion, an 18% increase from year-ago sales of $18.4 billion.

ON Semiconductor Corporation

ON Semiconductor Corporation (ON - Free Report) is an equipment manufacturer of a broad range of discrete and embedded semiconductor components.

Analysts have been pushing their earnings estimates higher over the last 60 days with a 100% revision agreement across the board. For the upcoming quarter in August, the Consensus Estimate Trend has climbed 21%, reflecting quarterly earnings of $1.26 per share and a sizable 100% growth in EPS from the year-ago quarter.

Furthermore, the current year’s consensus estimate trend has increased by a mighty 18% to $4.91 per share, a massive 66% jump in earnings year-over-year.

Zacks Investment Research
Image Source: Zacks Investment Research

On average, the company has beaten EPS estimates by 20% over its last four quarters, and in its latest quarter, ON beat EPS estimates by a substantial 16%. The company has chained together an impressive streak of eight straight quarterly EPS beats.  

The Zacks Consensus Sales Estimate has ON raking in $2 billion in the upcoming quarter, a 20% increase from year-ago quarterly sales of $1.7 billion. Additionally, the top line for FY22 is expected to expand by a mighty 18% year-over-year.

Bottom Line

While the current market conditions are unfavorable, to say the least, there are still plenty of solid stocks out there displaying sizable growth rates in both the top and bottom line – investors just have to dig a little to find these companies.

A great way to find these strong stocks is by utilizing the Zacks Rank. The Zacks Rank makes it easy to find stocks expected to outperform the general market by harnessing the power of earnings estimate revisions and vastly increasing the odds of investors’ success.

All three stocks mentioned carry the highly coveted Zacks Rank #1 (Strong Buy), which means that the odds are in investors’ favor in terms of share price appreciation.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Steel Dynamics, Inc. (STLD) - free report >>

Occidental Petroleum Corporation (OXY) - free report >>

ON Semiconductor Corporation (ON) - free report >>