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5 Must-Buy Mid-Cap Stocks Ahead of Q3 Earnings This Month

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The third-quarter 2021 earnings season is gradually gathering pace. We are in the early stage of the reporting cycle and results so far are highly encouraging. This is in contrast to the view of a section of economists and financial experts that the momentum of the U.S. economic recovery slipped last quarter owing to prolonged supply-chain disruptions, labor shortage, higher inflationary pressure and the resurgence of the Delta variant of the novel coronavirus.

Strong third-quarter results are driving Wall Street in October. Market participants have high expectations from this earnings season as overall earnings of corporate America are likely to remain robust after skyrocketing in the second quarter.

Third-quarter 2021 was not a good one for mid-cap stocks. The mid-cap-specific S&P 400 Index fell 2.1%, mainly due to a market meltdown in September. Nevertheless, five mid-cap stocks with a favorable Zacks Rank are set to beat earnings estimate this month. Investment in these stocks are likely to be fruitful going forward.

Impressive Start to Q3 Earnings Season

As of Oct 15, 41 S&P 500 companies reported third-quarter results. Total earnings of these companies are up 40.4% year over year on 13.4% higher revenues, with 85.4% beating EPS estimates and 70.7% surpassing revenue estimates.
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Total third-quarter earnings of the market's benchmark — the S&P 500 Index — are projected to jump 29.4% from the same period last year on 14.1% higher revenues, following 95% year-over-year earnings growth on 25.3% higher revenues in the second quarter and 49.3% year-over-year earnings growth on 10.3% higher revenues in first-quarter 2021.

The first two quarters of this year were favorably impacted since the corresponding quarters of last year were affected by the pandemic-led lockdowns and restrictions. Nevertheless, the U.S. economy started reopening partially albeit at a very slow pace since the third quarter of 2020. Notwithstanding favorable comparisons with last year, third-quarter 2021 earnings estimates reflect genuine growth, climbing 20% from the pre-pandemic third-quarter 2019.

Our Top Picks

We have narrowed down our search to five mid-cap (market capital >$2 billion <$9 billion) stocks that will report third-quarter 2021 earnings results this month. Each of our picks carries a Zacks Rank#1 (Strong Buy) and 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 Zacks Rank #3 (Hold) or better and a positive Earnings ESP, 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.

Zacks Investment ResearchImage Source: Zacks Investment Research

Triumph Bancorp Inc. (TBK - Free Report) is a financial holding company with a diversified line of community banking, commercial finance and asset management activities. It operates through three segments: Banking, Factoring, and Corporate.

The company has an Earnings ESP of +3.45%. It has an expected earnings growth rate of 80.6% for the current year. The Zacks Consensus Estimate for current-year earnings improved 1.3% over the last 30 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 48.4%. The company is set to release earnings results on Oct 20, after the closing bell.

AutoNation Inc. (AN - Free Report) is the largest automotive retailer in the United States. The company offers vehicle maintenance and repair services, vehicle parts, extended service contracts, vehicle protection products, and other aftermarket products. In addition, it arranges financing for vehicle purchases through third-party sources. It operates through three segments: Domestic, Import, and Premium Luxury.

The company has an Earnings ESP of +8.85%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 4.2% over the last 30 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 48%. The company is set to release earnings results on Oct 21, before the opening bell.

Olin Corp. (OLN - Free Report) manufactures and distributes chemical products in the United States, Europe, and internationally. The company operates as a vertically-integrated global producer and distributor of chemical products. It operates through three segments: Chlor Alkali Products and Vinyls, Epoxy, and Winchester.

The company has an Earnings ESP of +6.95%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 4.3% over the last 30 days. The company is set to release earnings results on Oct 21, after the closing bell.

Range Resources Corp. (RRC - Free Report) is an independent oil and gas company engaged in the exploration, development and acquisition of oil and gas properties, primarily in the Appalachian Basin and North Louisiana.

The company has an Earnings ESP of +1.63%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.5% over the last 7 days. The company is set to release earnings results on Oct 26, after the closing bell.

Ryder System Inc. (R - Free Report) is one of the world's largest providers of integrated logistics and transportation solutions. Its customers range from small businesses to large international enterprises. These clients are drawn from a wide variety of industries, the most significant of which include automotive, electronics, transportation, grocery, lumber and wood products, food service and home furnishing.

The company has an Earnings ESP of +4.73%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.1% over the last 7 days. It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 134.8%. The company is set to release earnings results on Oct 27, before the opening bell.

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