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5 Blue-Chip Stocks Poised to Beat Earnings Results This Month
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The second-quarter 2021 earnings season is in full swing this week. Although we are at the initial stage of this earnings period, results are so far highly impressive. Going forward, results are likely to remain firm. Five blue-chip stocks are set to beat on earnings this month. Investment in these may be fruitful in the near term.
A Brief Review of the Dow in Q2
The Dow — popularly known as the Blue-Chip index of Wall Street — had a solid second quarter. The 30-stock index was up 8.2% last quarter compared with 4.6% of the S&P 500 and 9.5% of the Nasdaq Composite.
The U.S. economy witnessed a robust recovery from the pandemic-led devastations in the second quarter. Nationwide deployment of COVID-19 vaccines on a priority basis, massive fiscal stimulus and the continuation of easy money policies by the Fed resulted in a faster-than-expected reopening of the economy.
The reopening of the economy has shifted market participants' interest toward cyclical stocks that were most affected in 2020 due to lockdowns. These stocks with high business potential were cheaply available in the second quarter. The composition of the Dow is mostly inclined toward cyclical stocks. Consequently, the index performed fairly well.
U.S. manufacturing is firing on all cylinders, and of late, the services sector has been thriving. Consumer spending, the largest driver of the GDP, remains strong, buoyed by around $2.6 trillion of forced savings. The labor market is settling down gradually. In the second quarter, consumer satisfaction optimization indexes remained elevated. Consequently, businesses also expanded their scale of operations.
Strong Start to Q2 Earnings
The second-quarter earnings season has been impressive thus far. As of Jul 16, 41 companies of the S&P 500 Index reported results. Total earnings of these companies were up 132.7% year over year on 13.8% higher revenues. Moreover, 90.2% of these companies beat their earnings per share (EPS) estimates and 87.8% surpassed revenue estimates.
For the second quarter as a whole, total earnings of the S&P 500 Index are expected to be up 69% year over year on 19.2% higher revenues. This indicates an improvement over the initial projection of EPS increasing 62.2% from the same period last year on 18.2% higher revenues.
These estimates are impressive primarily because second-quarter 2020 witnessed a lockdown owing to the global outbreak of the deadly coronavirus.
Notwithstanding favorable comparisons with last year, second-quarter 2021 earnings estimates indicate genuine growth of nearly 14.6% from the pre-pandemic second quarter of 2019. In fact, earnings estimates for 2021 have been growing steadily since the beginning of this year. (Read More: Q2 Earnings Reports Confirm Economic Boom Ahead)
Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after earnings releases. 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.
Image Source: Zacks Investment Research
DOW Inc. (DOW - Free Report) has an Earnings ESP of +4.04% for second-quarter 2021. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 2.8% over the last 7 days.
It recorded positive earnings surprises in the last four reported quarters, with an average beat of 26.5%. This Zacks Rank #2 company has a current dividend yield of 4.7%. It is set to release earnings results on Jul 22, before the opening bell.
3M Co. (MMM - Free Report) has an Earnings ESP of +1.11% for second-quarter 2021. It has an expected earnings growth rate of 11.9% for the current year. The Zacks Consensus Estimate for the current year has improved 0.5% over the last 60 days.
It recorded positive earnings surprises in the last four reported quarters, with an average beat of 9.9%. This Zacks Rank #2 company has a current dividend yield of 3% and is set to release earnings results on Jul 27, before the opening bell.
Visa Inc. (V - Free Report) has an Earnings ESP of +2.55% for third-quarter fiscal 2021 (ended June 2021). The company has an expected earnings growth rate of 11.1% for the current year (ending September 2021). The Zacks Consensus Estimate for the current year has improved 0.2% over the last 30 days.
It recorded positive earnings surprises in the last four reported quarters, with an average beat of 7%. This Zacks Rank #2 company has a current dividend yield of 0.5% and is set to release earnings results on Jul 27, after the closing bell.
Apple Inc. (AAPL - Free Report) has an Earnings ESP of +3.40% for third-quarter fiscal 2021 (ended June 2021). The company has an expected earnings growth rate of 58.2% for the current year (ending September 2021). The Zacks Consensus Estimate for the current year has improved 0.2% over the last 7 days.
It recorded positive earnings surprises in the last four reported quarters, with an average beat of 23%. This Zacks Rank #2 company has a current dividend yield of 0.6%. It is set to release earnings results on Jul 27, after the closing bell.
McDonald's Corp. (MCD - Free Report) has an Earnings ESP of +0.20% for second-quarter 2021. It has an expected earnings growth rate of 42% for the current year. The Zacks Consensus Estimate for the current year has improved 0.1% over the last 60 days.
It recorded positive earnings surprises in two out of the last four reported quarters, with an average beat of 1.3%. This Zacks Rank #3 company has a current dividend yield of 2.2% and is set to release earnings results on Jul 28, before the opening bell.
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5 Blue-Chip Stocks Poised to Beat Earnings Results This Month
The second-quarter 2021 earnings season is in full swing this week. Although we are at the initial stage of this earnings period, results are so far highly impressive. Going forward, results are likely to remain firm. Five blue-chip stocks are set to beat on earnings this month. Investment in these may be fruitful in the near term.
A Brief Review of the Dow in Q2
The Dow — popularly known as the Blue-Chip index of Wall Street — had a solid second quarter. The 30-stock index was up 8.2% last quarter compared with 4.6% of the S&P 500 and 9.5% of the Nasdaq Composite.
The U.S. economy witnessed a robust recovery from the pandemic-led devastations in the second quarter. Nationwide deployment of COVID-19 vaccines on a priority basis, massive fiscal stimulus and the continuation of easy money policies by the Fed resulted in a faster-than-expected reopening of the economy.
The reopening of the economy has shifted market participants' interest toward cyclical stocks that were most affected in 2020 due to lockdowns. These stocks with high business potential were cheaply available in the second quarter. The composition of the Dow is mostly inclined toward cyclical stocks. Consequently, the index performed fairly well.
U.S. manufacturing is firing on all cylinders, and of late, the services sector has been thriving. Consumer spending, the largest driver of the GDP, remains strong, buoyed by around $2.6 trillion of forced savings. The labor market is settling down gradually. In the second quarter, consumer satisfaction optimization indexes remained elevated. Consequently, businesses also expanded their scale of operations.
Strong Start to Q2 Earnings
The second-quarter earnings season has been impressive thus far. As of Jul 16, 41 companies of the S&P 500 Index reported results. Total earnings of these companies were up 132.7% year over year on 13.8% higher revenues. Moreover, 90.2% of these companies beat their earnings per share (EPS) estimates and 87.8% surpassed revenue estimates.
For the second quarter as a whole, total earnings of the S&P 500 Index are expected to be up 69% year over year on 19.2% higher revenues. This indicates an improvement over the initial projection of EPS increasing 62.2% from the same period last year on 18.2% higher revenues.
These estimates are impressive primarily because second-quarter 2020 witnessed a lockdown owing to the global outbreak of the deadly coronavirus.
Notwithstanding favorable comparisons with last year, second-quarter 2021 earnings estimates indicate genuine growth of nearly 14.6% from the pre-pandemic second quarter of 2019. In fact, earnings estimates for 2021 have been growing steadily since the beginning of this year. (Read More: Q2 Earnings Reports Confirm Economic Boom Ahead)
Our Top Picks
The five Dow companies discussed herein are slated to release earnings results this month. Each of these stocks carries a Zacks Rank# 2 (Buy) or 3 (Hold) and has a positive Earnings ESP. 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 positive Earnings ESP and a Zacks Rank #3 (Hold) or better, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after earnings releases. 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.
Image Source: Zacks Investment Research
DOW Inc. (DOW - Free Report) has an Earnings ESP of +4.04% for second-quarter 2021. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 2.8% over the last 7 days.
It recorded positive earnings surprises in the last four reported quarters, with an average beat of 26.5%. This Zacks Rank #2 company has a current dividend yield of 4.7%. It is set to release earnings results on Jul 22, before the opening bell.
3M Co. (MMM - Free Report) has an Earnings ESP of +1.11% for second-quarter 2021. It has an expected earnings growth rate of 11.9% for the current year. The Zacks Consensus Estimate for the current year has improved 0.5% over the last 60 days.
It recorded positive earnings surprises in the last four reported quarters, with an average beat of 9.9%. This Zacks Rank #2 company has a current dividend yield of 3% and is set to release earnings results on Jul 27, before the opening bell.
Visa Inc. (V - Free Report) has an Earnings ESP of +2.55% for third-quarter fiscal 2021 (ended June 2021). The company has an expected earnings growth rate of 11.1% for the current year (ending September 2021). The Zacks Consensus Estimate for the current year has improved 0.2% over the last 30 days.
It recorded positive earnings surprises in the last four reported quarters, with an average beat of 7%. This Zacks Rank #2 company has a current dividend yield of 0.5% and is set to release earnings results on Jul 27, after the closing bell.
Apple Inc. (AAPL - Free Report) has an Earnings ESP of +3.40% for third-quarter fiscal 2021 (ended June 2021). The company has an expected earnings growth rate of 58.2% for the current year (ending September 2021). The Zacks Consensus Estimate for the current year has improved 0.2% over the last 7 days.
It recorded positive earnings surprises in the last four reported quarters, with an average beat of 23%. This Zacks Rank #2 company has a current dividend yield of 0.6%. It is set to release earnings results on Jul 27, after the closing bell.
McDonald's Corp. (MCD - Free Report) has an Earnings ESP of +0.20% for second-quarter 2021. It has an expected earnings growth rate of 42% for the current year. The Zacks Consensus Estimate for the current year has improved 0.1% over the last 60 days.
It recorded positive earnings surprises in two out of the last four reported quarters, with an average beat of 1.3%. This Zacks Rank #3 company has a current dividend yield of 2.2% and is set to release earnings results on Jul 28, before the opening bell.