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How to Boost Your Portfolio with Top Basic Materials Stocks Set to Beat Earnings
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.
Should You Consider Yamana Gold?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Yamana Gold earns a #2 (Buy) right now and its Most Accurate Estimate sits at $0.07 a share, just 21 days from its upcoming earnings release on February 16, 2023.
By taking the percentage difference between the $0.07 Most Accurate Estimate and the $0.06 Zacks Consensus Estimate, Yamana Gold has an Earnings ESP of +8.33%. Investors should also know that AUY is one of a large group of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
AUY is part of a big group of Basic Materials stocks that boast a positive ESP, and investors may want to take a look at Linde (LIN - Free Report) as well.
Linde, which is readying to report earnings on February 7, 2023, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $2.93 a share, and LIN is 12 days out from its next earnings report.
Linde's Earnings ESP figure currently stands at +0.62% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.91.
AUY and LIN's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>
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How to Boost Your Portfolio with Top Basic Materials Stocks Set to Beat Earnings
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.
Should You Consider Yamana Gold?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Yamana Gold earns a #2 (Buy) right now and its Most Accurate Estimate sits at $0.07 a share, just 21 days from its upcoming earnings release on February 16, 2023.
By taking the percentage difference between the $0.07 Most Accurate Estimate and the $0.06 Zacks Consensus Estimate, Yamana Gold has an Earnings ESP of +8.33%. Investors should also know that AUY is one of a large group of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
AUY is part of a big group of Basic Materials stocks that boast a positive ESP, and investors may want to take a look at Linde (LIN - Free Report) as well.
Linde, which is readying to report earnings on February 7, 2023, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $2.93 a share, and LIN is 12 days out from its next earnings report.
Linde's Earnings ESP figure currently stands at +0.62% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.91.
AUY and LIN's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>