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5 Must-Buy Growth Stocks Set to Beat Q2 Earnings Estimates
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We are in the middle of the coronavirus-stricken second-quarter 2020 earnings session and the results are so far highly disappointing mainly owing to lockdowns that were imposed to curb the spread of COVID-19.
Nevertheless, growth investors are primarily focused on stocks with aggressive earnings or revenue improvement, which should propel their stock price higher in the future. Although corporate earnings growth is negative year over year, a handful of growth stocks with a favorable Zacks Rank are set to beat second-quarter earnings estimates.
Q2 At a Glance
The second quarter had two distinct characters. First, economic activities were way below last year since lockdowns continued till the third week of May. Several economists have forecast that this earnings session will be the worst in 12 years, since the days of the Great Recession.
On the other hand, a series of economic data have indicated that coronavirus-induced devastations may not be as serve as expected earlier. Unprecedented fiscal and monetary stimulus injected by the government and the Fed helped in strengthening consumer spending and business confidence. Consequently, Wall Street witnessed its best second quarter in more than two decades.
However, a second wave of COVID-19 in some states since the second half of June has forced them to again close some parts of their economies in less than a month. The resurgence significantly dented a section of economists and stifled financial experts' expectations of a V-shaped recovery of the U.S. economy.
As of Jul 28, 163 S&P 500 members reported second-quarter 2020 earnings results. Total earnings of these companies are down 38.6% from the same period last year on 6.3% lower revenues. Of the total, 75.54% surpassed EPS estimates and 64.4% outpaced revenue estimates.
Overall, second-quarter earnings for the S&P 500 Index are projected to be down 44.8% year over year on 10.7% lower revenues. Notably, first-quarter earnings of companies on the S&P 500 Index were down 13.5% on 1.4% higher revenues. (Read More: The Technology Sector Shows its Earnings Power Amid Coronavirus)
5 Growth Stocks Set to Beat Earnings Estimates
Given the bleak earnings picture, we have zeroed in on five growth stocks that have a positive Earnings ESP and are slated to release earnings reports in August. Each of our picks carries a Zacks Rank #1 (Strong Buy) and Growth Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our five picks in the last quarter.
Noble Energy Inc. is engaged in the acquisition, exploration, development and production of crude oil and natural gas worldwide. It owns, operates, develops and acquires domestic midstream infrastructure assets in the DJ and Delaware Basins. The company has an Earnings ESP of +9.62%.
The Zacks Consensus Estimate for Noble Energy's current-year earnings has improved 4.3% over the last 7 days. It has a trailing four-quarter earnings surprise of 144.2%, on average. The company is set to release earnings results on Aug 3, before the opening bell.
TopBuild Corp. (BLD - Free Report) installs and distributes insulation and other building products to the United States construction industry. It operates in two segments, Installation and Distribution. The company has an Earnings ESP of +29.11%.
The Zacks Consensus Estimate for TopBuild's current-year earnings has improved 4.8% over the last 30 days. It has a trailing four-quarter earnings surprise of 8.7%, on average. The company is set to release earnings results on Aug 4, before the opening bell.
Nu Skin Enterprises Inc. (NUS - Free Report) develops and distributes a wide range of premium cosmetics, beauty, personal care and wellness products. The company has an Earnings ESP of +6.35%.
The Zacks Consensus Estimate for Bonanza Nu Skin Enterprises' current-year earnings has improved 2.5% over the last 7 days. It has a trailing four-quarter earnings surprise of 13.5%, on average. The company is set to release earnings results on Aug 5, after the closing bell.
Bonanza Creek Energy Inc. is an exploration and production company, focusing on the extraction of onshore oil and related liquids-rich natural gas in the United States. The company has an Earnings ESP of +13.66%.
The Zacks Consensus Estimate for Bonanza Creek Energy's current-year earnings has improved 4.1% over the last 7 days. It has a trailing four-quarter earnings surprise of 8.7%, on average. The company is set to release earnings results on Aug 6, after the closing bell.
Ollie's Bargain Outlet Holdings Inc. (OLLI - Free Report) is a value retailer of brand name merchandise at drastically reduced prices. The company has an Earnings ESP of +8.86% for second-quarter fiscal 2021 (ended July 2021).
The company has an expected earnings growth rate of 39.8% for the current year (ending January 2020). The Zacks Consensus Estimate for the current year has improved by 18.6% over the last 7 days. It has a trailing four-quarter earnings surprise of 4.7%, on average. The company is set to release earnings results on Aug 26, after the closing bell.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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5 Must-Buy Growth Stocks Set to Beat Q2 Earnings Estimates
We are in the middle of the coronavirus-stricken second-quarter 2020 earnings session and the results are so far highly disappointing mainly owing to lockdowns that were imposed to curb the spread of COVID-19.
Nevertheless, growth investors are primarily focused on stocks with aggressive earnings or revenue improvement, which should propel their stock price higher in the future. Although corporate earnings growth is negative year over year, a handful of growth stocks with a favorable Zacks Rank are set to beat second-quarter earnings estimates.
Q2 At a Glance
The second quarter had two distinct characters. First, economic activities were way below last year since lockdowns continued till the third week of May. Several economists have forecast that this earnings session will be the worst in 12 years, since the days of the Great Recession.
On the other hand, a series of economic data have indicated that coronavirus-induced devastations may not be as serve as expected earlier. Unprecedented fiscal and monetary stimulus injected by the government and the Fed helped in strengthening consumer spending and business confidence. Consequently, Wall Street witnessed its best second quarter in more than two decades.
However, a second wave of COVID-19 in some states since the second half of June has forced them to again close some parts of their economies in less than a month. The resurgence significantly dented a section of economists and stifled financial experts' expectations of a V-shaped recovery of the U.S. economy.
Disappointing Second-Quarter Results & Projections
As of Jul 28, 163 S&P 500 members reported second-quarter 2020 earnings results. Total earnings of these companies are down 38.6% from the same period last year on 6.3% lower revenues. Of the total, 75.54% surpassed EPS estimates and 64.4% outpaced revenue estimates.
Overall, second-quarter earnings for the S&P 500 Index are projected to be down 44.8% year over year on 10.7% lower revenues. Notably, first-quarter earnings of companies on the S&P 500 Index were down 13.5% on 1.4% higher revenues. (Read More: The Technology Sector Shows its Earnings Power Amid Coronavirus)
5 Growth Stocks Set to Beat Earnings Estimates
Given the bleak earnings picture, we have zeroed in on five growth stocks that have a positive Earnings ESP and are slated to release earnings reports in August. Each of our picks carries a Zacks Rank #1 (Strong Buy) and Growth Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our five picks in the last quarter.
Noble Energy Inc. is engaged in the acquisition, exploration, development and production of crude oil and natural gas worldwide. It owns, operates, develops and acquires domestic midstream infrastructure assets in the DJ and Delaware Basins. The company has an Earnings ESP of +9.62%.
The Zacks Consensus Estimate for Noble Energy's current-year earnings has improved 4.3% over the last 7 days. It has a trailing four-quarter earnings surprise of 144.2%, on average. The company is set to release earnings results on Aug 3, before the opening bell.
TopBuild Corp. (BLD - Free Report) installs and distributes insulation and other building products to the United States construction industry. It operates in two segments, Installation and Distribution. The company has an Earnings ESP of +29.11%.
The Zacks Consensus Estimate for TopBuild's current-year earnings has improved 4.8% over the last 30 days. It has a trailing four-quarter earnings surprise of 8.7%, on average. The company is set to release earnings results on Aug 4, before the opening bell.
Nu Skin Enterprises Inc. (NUS - Free Report) develops and distributes a wide range of premium cosmetics, beauty, personal care and wellness products. The company has an Earnings ESP of +6.35%.
The Zacks Consensus Estimate for Bonanza Nu Skin Enterprises' current-year earnings has improved 2.5% over the last 7 days. It has a trailing four-quarter earnings surprise of 13.5%, on average. The company is set to release earnings results on Aug 5, after the closing bell.
Bonanza Creek Energy Inc. is an exploration and production company, focusing on the extraction of onshore oil and related liquids-rich natural gas in the United States. The company has an Earnings ESP of +13.66%.
The Zacks Consensus Estimate for Bonanza Creek Energy's current-year earnings has improved 4.1% over the last 7 days. It has a trailing four-quarter earnings surprise of 8.7%, on average. The company is set to release earnings results on Aug 6, after the closing bell.
Ollie's Bargain Outlet Holdings Inc. (OLLI - Free Report) is a value retailer of brand name merchandise at drastically reduced prices. The company has an Earnings ESP of +8.86% for second-quarter fiscal 2021 (ended July 2021).
The company has an expected earnings growth rate of 39.8% for the current year (ending January 2020). The Zacks Consensus Estimate for the current year has improved by 18.6% over the last 7 days. It has a trailing four-quarter earnings surprise of 4.7%, on average. The company is set to release earnings results on Aug 26, after the closing bell.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>