For Immediate Release
Chicago, IL – February 22, 2021 – Stocks in this week’s article are Sanderson Farms, Inc. (
SAFM Quick Quote SAFM - Free Report) , Take-Two Interactive Software Inc. ( TTWO Quick Quote TTWO - Free Report) , Caterpillar Inc. ( CAT Quick Quote CAT - Free Report) , D.R. Horton, Inc. ( DHI Quick Quote DHI - Free Report) and Align Technology, Inc. ( ALGN Quick Quote ALGN - Free Report) . Top 5 Stocks with Solid Earnings Beat Potential
Tapping stocks that come up with solid earnings is a common practice. But instead of picking such stocks post earnings, investing in those that are likely to beat market expectations may increase your gains manifold.
Why Is a Positive Earnings Surprise So Important?
Historically, stocks of companies with solid quarterly earnings (on a nominal basis) fall if they miss or just meet market expectations. After all, a 20% earnings rise (though it looks good apparently) doesn't tell you if earnings growth has been exhibiting a decelerating trend. If that is the case, the company's fundamentals are in question.
There is also the factor of seasonal fluctuation. If a company's Q1 is seasonally weak and Q4 is strong, it is likely to report a sequential earnings decline. In such cases, growth rates are ambiguous while judging the company's true health.
Meanwhile, Wall Street analysts study companies' financials and initiatives to forecast earnings. They in fact club their insights and the company's guidance to arrive at an earnings estimate. So, outperforming that estimate is almost equivalent to beating the company's own expectation as well as market perception. And if the company manages to surpass earnings by a wide margin, it typically drives the stock higher right after the release.
How to Find Those Gems?
Since it is hard to predict if a company will beat or miss in the upcoming earnings season, investors can check its earnings surprise history. A notable track record generally acts as a tailwind. It revs up chances of beating estimates in the next release too as investors expect the company to use the same old trick to surpass expectations, or is smart enough to pull off a beat in the next release.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1266509/top-5-stocks-with-solid-earnings-beat-potential Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year.
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Contact: Jim Giaquinto
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