Back to top

Best Earnings ESP stocks for August 29th

Read MoreHide Full Article

Q2 earnings have all but passed and investors are already looking forward to the next round of results which begins in October.

This “month of rest” may not be that relaxing as September is the worst performing month in history with an average return of -0.79% compared to +1.12% for the rest  of the months in the year.  Q3 results should also begin to include more revisions to the coming full year’s expectations, which have remained relatively unscathed for those who have been aggressive enough to project that far out.

For the second quarter, year over year revenue growth remained non-existent and poses a real challenge for those who are buying into the S&P 500 at these levels.  Economic data remains flat to bearish and China’s growth is continuing to slow. It seems that the potential for QE from several major central banks is enough to hold things up for now.  But we must remember that it all comes back to earnings and if corporate America can’t continue to deliver, sellers' justice may be swift.

About Zacks Earnings ESP
Earnings ESP is Zacks’ proprietary methodology for determining which stocks have the best chance to surprise with their next earnings announcement. The Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Consensus.
The Zacks ESP helps predict earnings surprises to the upside and downside; the greater the ESP (positive or negative) the greater the likelihood for a surprise. 
I use ESP to help quantify the conviction of the analysts for a surprise and stack the odds in my favor when I combine it with other measurements and statistics.
This can work for bullish potential surprises (positive ESP) as well as bearish surprises (negative ESP).

Bullish ESP Stocks
Dollar General (DG - Free Report)  is a Zacks Rank 2 stock with a positive earnings ESP of 2% for the current quarter; the Zacks Consensus is for a profit of 64 cents, with the most accurate estimate being for 65 cents.

While it may not be the strongest ESP, Dollar General may be the choice for consumers who are under stress. Consumer confidence, which is at its lowest level since November of 2011 tells me that thrifty shopping is still in vogue.  Walmart also noticed that spending patterns are showing a cash strapped consumer looking for deals, which could be a benefit for Dollar General.

For the contrarians out there, Dollar General is off almost 12% from its July highs which may present a value proposition.  Analyst momentum has been positive over the last 90 days and DG is currently trading at 17 times forward earnings.

– Dollar General reports earnings on September 5th

Conns Inc. ((CONN - Free Report) ) is a Zacks Rank 2 stock with a positive earnings ESP of 2.6% for the current quarter.  The Zacks consensus estimate is for Q2 EPS of $0.35, with the most accurate estimate at $0,36.  

The most likely reason for the lower ESP here is due to the fact that Conn’s pre-released some very favorable sales data just a couple weeks ago.  Q2 revenue at stores open at least a year rose 22%, boosted by a jump in demand for furniture and mattresses.  Total sales of furniture and mattresses increased 50 percent to $31.9 million, while total home office sales grew 35 percent to $14.4 million.

This plays into the housing strength that we have been seeing and is a welcome statistic in a mostly gray environment.  Conn’s offers discounted goods and operates their own consumer credit facility, making it easy for buyer with less than perfect credit to get appliances and furnishings.

Even with the recent rally, there may still be more upside in Conn’s; analyst momentum is still strong going into the report. 

– Conn’s reports earnings on September 5th

Pharmacyclics, Inc. (PCYCis also a Zacks Rank 2 stock with a positive earnings ESP of 16% for the current quarter; the Zacks Consensus is for a loss of 25 cents, with the most accurate consensus looking for a loss of only 21 cents. 

There is no doubt that a company not making money poses a bit more risk and the fact that the name is uncommon and hard to pronounce doesn’t make things any easier.  Healthcare is a widely debated issue, but I think we can all agree that companies who help terminally ill patients live longer more fuller lives will continue to prosper, no matter what happens to the curent state of care in the U.S. 

I am not going to pretend I know the specifics of Pharmacyclics reaserch, but based off analyst action and momentum, there is a positive bias into this next report.

– Pharmacyclics reports earnings on September 10th

Take Earnings a Step Further
If the ESP method sounds intriguing to you for improving your portfolio performance, you should check out Zacks Whisper Trader.

Not only do I utilize Earnings ESP but I also factor in several critical data sets to create the “secret sauce” I use to achieve almost 80% accuracy in identifying positive earnings surprises … before they’re reported. 

Senior Equities Strategist, Jared Levy, is the editor of Whisper Trader and can show you how to use the power of Zacks Earnings ESP and earnings surprises for timely, steady gains.

Learn more about Whisper Trader now


In-Depth Zacks Research for the Tickers Above

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

Dollar General Corporation (DG) - free report >>

Conn's, Inc. (CONN) - free report >>

More from Zacks Investment Ideas

You May Like