Back to top

Investment Ideas

Earnings season is upon us as we roll into the second major week of earnings season. Investors are looking to earnings reports to give a clue as to whether or not the impressive summer rally is justified. If individual stocks beat EPS expect them to continue higher. However, if a company misses on top or bottom line, expect investors to be disappointed and to punish with sell orders.

Below I screened five top ranked stocks that will be expected to beat earnings this quarter. The companies all report this week and are a Zacks Rank #1(Strong Buy) or #2 (Buy) stocks.

World Fuel Services(INT - Free Report)  is a Zacks Rank #1 (Strong Buy) that markets aviation and marine fuel services. In their aviation fuel services business, World Fuel extends credit and provides around-the-world single-supplier convenience, 24-hour service, and competitively-priced aviation fuel and other aviation related services, including fuel management services, to passenger, cargo and charter airlines.World Fuel has 4700 employees and is based in Miami, FL.  

The company has a market cap of $3.3 Billion with a Forward PE of 16. The stock sports Zacks Style Scores of “A” in Growth and “B” in Value. World Fuel pays a dividend of 0.51% and has expected EPS growth of 5.00%.

Q2 earnings will be out on July 27th and estimates for the current year and next year have ticked higher over the last month. Over the last 60 days, estimates have been revised 3% higher, from $2.83 to $2.92. For fiscal year 2017, estimates have been revised 7.4% higher, from $3.10 to $3.33. Looking at the chart below, the company has only missed once over the last four years. 

AKS Steel (AKS - Free Report)  is a Zacks Rank #2 (Buy) producesflat-rolled carbon, stainless and electrical steel products, as well as carbon and stainless tubular steel products, for automotive, appliance, construction and manufacturing markets. AKS has 8500 employees and is based in West Chester, Ohio.

The company has a market cap of $1.3 Billion with a Forward PE of 19. The stock sports Zacks Style Scores of “A” in both Growth and Momentum, plus a “B” in Value. The company pays no dividend and has expected EPS growth of 5%.

Q2 earnings will be out on July 26th and estimates for the current quarter and fiscal year have surged higher over the last month. Estimates have been revised 50% higher, from -$0.08 to -$0.04. For fiscal year 2016, estimates have been revised 314% higher, from $0.07 to $0.29.

Anadarko Petroleum(APC - Free Report)  is a Zacks Rank #2 (Buy) that isone of the world's largest independent oil and gas exploration and production companies. APChas 5800 employees and is based in The Woodlands, Texas.

The company has a market cap of $28 Billion with a Forward PE of -72. The stock sports Zacks Style Scores of “A” in Momentum. APC pays a dividend of 0.37% and has expected EPS growth of 6.50%. A purchase of APC shares is a bet on the turnaround of the energy sector and estimates are showing some improvement.

Q2 earnings will be out on July 26th and estimates for the current quarter are turning higher. Over the last 90 days, estimates for fiscal year 2016 have been revised1 2% higher, from -$3.64 to -$3.19. For fiscal year 2017, estimates have been revised 19% higher, from -$1.44 to -$1.16.

General Dynamics (GD - Free Report) ) is a Zacks Rank #2 (Buy) who’s primary businesses focus is on shipbuilding and marine systems, business aviation, information systems, and land and amphibious combat systems.GD has almost 100,000 employees and is based in Falls Church, Virginia.

The company has a market cap of $44 Billion with a Forward PE of 15. The stock sports Zacks Style Scores of “B” in both Growth and Value. GD pays a dividend of 2.11% and has expected EPS growth of 7.85%.

Q2 earnings will be out on July 27th and estimates have been steady for near term quarters, but ticked high for fiscal year 2016 and 2017.Over the last 90 days 2016 has seen estimates have revised 1.4% higher, from $9.34 to $9.48. For fiscal year 2017, estimates have been revised 1% higher, from $9.94 to $10.03

Simon Property (SPG - Free Report)  is a Zacks Rank #2 (Buy) that is a self-administered and self-managed real estate investment trust which, through its subsidiary partnerships, is engaged in the ownership, development, management, leasing, acquisition and expansion of income-producing properties, primarily regional malls and community shopping centers. Simon has 3150 employees and is based in Indianapolis, Indiana.

The company has a market cap of $70 Billion with a Forward PE of 21. The stock sports Zacks Style Scores of “B” in Growth. Simon pays a dividend of 2.84% and has expected EPS growth of 8.24%.

Q2 earnings will be out on July 27th and estimates for the current quarter and year have been pretty steady. This is normal for a REIT as cash flow is typically constant and known unless under stress. Looking at the chart below investors have rewarded Simons stock as the company has only missed once since 2012.

In summary

As investors push through the summer and another earnings season, they will be paying attention to   companies that continue to perform by beating earnings. Speculators can jump ahead of the game by following estimates and sticking with companies with a good track record of beating EPS in the past. 

Note:Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.