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3 Highly-Ranked Large Cap Stocks to Buy Before Earnings for Big Upside
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Today’s episode of Full Court Finance at Zacks takes a look at where the market stands as big tech stocks start reporting quarterly earnings results. The episode then explores three highly-ranked large-cap stocks—Honeywell, DexCom, and NextEra Energy—that investors might want to buy before their upcoming earnings releases for both near-term and long-term upside.
Wall Street swung between smalls declines and gains through late-afternoon trading on Friday. The more mundane session followed a rather big pullback from the Nasdaq on Thursday after investors dumped Tesla and Netflix stock to lock in some profits following the massive first-half run.
The reactions to Netflix and Tesla, which spilled over into semiconductors and much of tech, could be a sign of what’s to come. Some big tech names that have skyrocketed in 2023 and are trading at or near their highs might have to post big beat-and-raise quarters to keep their runs going in the near term.
In fact, a profit-taking pullback in the coming weeks would possibly prove beneficial to the market. Despite the possibility of near-term volatility or selling, the bedrock supporting the bull market appears to remain solid, with inflation cooling, the Fed near the end of its hiking cycle, and the earnings picture improving (also read: Q2 Earnings Season Gets Off to a Positive Start).
Honeywell (HON - Free Report) ) is set to report its Q2 results on Thursday, July 27. Honeywell is an industrial products company that’s transformed into a hybrid digital-software-industrial titan. The historic firm’s portfolio spans aerospace, building technologies, energy, healthcare, utilities, logistics, and far beyond. Honeywell’s diverse offerings support NASA missions all the way to high-tech temperature control systems for homes and buildings.
Image Source: Zacks Investment Research
Honeywell’s outlook showcases solid top and bottom line growth for $140 billion market cap firm. And its improving earning outlook helps it land a Zacks Rank #2 (Buy) right now. HON’s dividend yields 2% at the moment, and it has crushed the S&P 500 over the last 20 years, up 640% vs. 360%. Yet, the stock is still down YTD and trading around 10% below its records.
Image Source: Zacks Investment Research
Honeywell is now trading above its 50-day and 200-day moving averages and it found support at its 21-day recently, after popping off its 50-week moving average in May. And HON is trading at a 25% discount to its highs at 21.6X forward 12 month earnings, which is right near its Zacks econ sector and its own 5-year median.
DexCom, Inc. (DXCM - Free Report) ) makes continuous glucose monitoring devices designed for people with diabetes. DXCM is set to report its second quarter financial results on July 27. The connected-health firm allows people with diabetes the chance to place a small sensor just beneath their skin to help them continuously monitor their glucose levels and avoid the dreaded finger prick.
Image Source: Zacks Investment Research
DexCom’s continuous glucose monitoring offerings are part of a connected health revolution that’s still in the early days and is poised to become the standard form of medical care and treatment in the decades to come.
DexCom’s addressable market continues to expand, with 1 in 10 people in the U.S. currently suffering from diabetes, and far more have “prediabetes,” according to the CDC. Rising diabetes rates are not just a U.S. problem, with roughly 540 million adults, or 1 in 10 people around the world living with diabetes, with that figure set to keep growing.
Image Source: Zacks Investment Research
DexCom’s revenue and earnings growth outlooks showcase the continuation of impressively large and steady top and bottom line growth. DXCM’s upward earnings revisions help it land a Zacks Rank #2 (Buy). Wall Street is also very high on the stock, with 13 of the 15 brokerage recommendations Zacks has at “Strong Buys.”
DexCom shares have skyrocketed over 2,200% in the last 10 years, yet they are currently trading 20% below their highs. Plus, DXCM has already mounted a roughly 85% comeback off of its lows last year. And DXCM currently trades above its 21-day, 50-day, and 200-day moving averages.
NextEra Energy (NEE - Free Report) ) operates one of the largest electric utilities, Florida Power & Light Company, in the U.S. and is one of the biggest producers of wind and solar energy on the planet. NextEra is a battery storage leader as well, and it is exposed to the potential long-term upside of nuclear power. The $150 billion market cap firm is also the largest holding in the Utilities Select Sector SPDR ETF (XLU - Free Report) .
NextEra’s revenue is projected to grow by 30% in FY23 to $27 billion and then climb 8% higher next year to help boost its bottom line by 7% and 9%, respectively, based on Zacks estimates. Plus its earnings outlook continues to improve to help it grab a Zacks Rank #2 (Buy) heading into its earnings release on Tuesday, July 25.
Image Source: Zacks Investment Research
NextEra’s dividend currently yields 2.5% and it has raised its payout by an average of 11% annually over the past five years. And 10 of the 13 brokerage recommendations Zacks has for NEE are “Strong Buys,” with no “Sells.”
NEE stock has climbed by 260% in the past decade and 890% in the last 20 years, with a total return of roughly 1,700%. This outperformance includes roughly two and a half years of choppy sideways movement, with NEE trading 15% below its records.
Image Source: Zacks Investment Research
NextEra could be ready to break out of its slump, with it back above its 200-week moving average, as well as its 21-day and 50-day. On the valuation front, NEE trades at a 33% discount to own its highs at 22.8X forward 12-month earnings and not too far above its decade-long median. NextEra is currently trading at its lowest valuation levels over the past three years.
(Disclosure: Ben Rains own NEE in Zacks Alternative Energy Innovators and in his personal portfolio)
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3 Highly-Ranked Large Cap Stocks to Buy Before Earnings for Big Upside
Today’s episode of Full Court Finance at Zacks takes a look at where the market stands as big tech stocks start reporting quarterly earnings results. The episode then explores three highly-ranked large-cap stocks—Honeywell, DexCom, and NextEra Energy—that investors might want to buy before their upcoming earnings releases for both near-term and long-term upside.
Wall Street swung between smalls declines and gains through late-afternoon trading on Friday. The more mundane session followed a rather big pullback from the Nasdaq on Thursday after investors dumped Tesla and Netflix stock to lock in some profits following the massive first-half run.
The reactions to Netflix and Tesla, which spilled over into semiconductors and much of tech, could be a sign of what’s to come. Some big tech names that have skyrocketed in 2023 and are trading at or near their highs might have to post big beat-and-raise quarters to keep their runs going in the near term.
In fact, a profit-taking pullback in the coming weeks would possibly prove beneficial to the market. Despite the possibility of near-term volatility or selling, the bedrock supporting the bull market appears to remain solid, with inflation cooling, the Fed near the end of its hiking cycle, and the earnings picture improving (also read: Q2 Earnings Season Gets Off to a Positive Start).
Honeywell (HON - Free Report) ) is set to report its Q2 results on Thursday, July 27. Honeywell is an industrial products company that’s transformed into a hybrid digital-software-industrial titan. The historic firm’s portfolio spans aerospace, building technologies, energy, healthcare, utilities, logistics, and far beyond. Honeywell’s diverse offerings support NASA missions all the way to high-tech temperature control systems for homes and buildings.
Image Source: Zacks Investment Research
Honeywell’s outlook showcases solid top and bottom line growth for $140 billion market cap firm. And its improving earning outlook helps it land a Zacks Rank #2 (Buy) right now. HON’s dividend yields 2% at the moment, and it has crushed the S&P 500 over the last 20 years, up 640% vs. 360%. Yet, the stock is still down YTD and trading around 10% below its records.
Image Source: Zacks Investment Research
Honeywell is now trading above its 50-day and 200-day moving averages and it found support at its 21-day recently, after popping off its 50-week moving average in May. And HON is trading at a 25% discount to its highs at 21.6X forward 12 month earnings, which is right near its Zacks econ sector and its own 5-year median.
DexCom, Inc. (DXCM - Free Report) ) makes continuous glucose monitoring devices designed for people with diabetes. DXCM is set to report its second quarter financial results on July 27. The connected-health firm allows people with diabetes the chance to place a small sensor just beneath their skin to help them continuously monitor their glucose levels and avoid the dreaded finger prick.
Image Source: Zacks Investment Research
DexCom’s continuous glucose monitoring offerings are part of a connected health revolution that’s still in the early days and is poised to become the standard form of medical care and treatment in the decades to come.
DexCom’s addressable market continues to expand, with 1 in 10 people in the U.S. currently suffering from diabetes, and far more have “prediabetes,” according to the CDC. Rising diabetes rates are not just a U.S. problem, with roughly 540 million adults, or 1 in 10 people around the world living with diabetes, with that figure set to keep growing.
Image Source: Zacks Investment Research
DexCom’s revenue and earnings growth outlooks showcase the continuation of impressively large and steady top and bottom line growth. DXCM’s upward earnings revisions help it land a Zacks Rank #2 (Buy). Wall Street is also very high on the stock, with 13 of the 15 brokerage recommendations Zacks has at “Strong Buys.”
DexCom shares have skyrocketed over 2,200% in the last 10 years, yet they are currently trading 20% below their highs. Plus, DXCM has already mounted a roughly 85% comeback off of its lows last year. And DXCM currently trades above its 21-day, 50-day, and 200-day moving averages.
NextEra Energy (NEE - Free Report) ) operates one of the largest electric utilities, Florida Power & Light Company, in the U.S. and is one of the biggest producers of wind and solar energy on the planet. NextEra is a battery storage leader as well, and it is exposed to the potential long-term upside of nuclear power. The $150 billion market cap firm is also the largest holding in the Utilities Select Sector SPDR ETF (XLU - Free Report) .
NextEra’s revenue is projected to grow by 30% in FY23 to $27 billion and then climb 8% higher next year to help boost its bottom line by 7% and 9%, respectively, based on Zacks estimates. Plus its earnings outlook continues to improve to help it grab a Zacks Rank #2 (Buy) heading into its earnings release on Tuesday, July 25.
Image Source: Zacks Investment Research
NextEra’s dividend currently yields 2.5% and it has raised its payout by an average of 11% annually over the past five years. And 10 of the 13 brokerage recommendations Zacks has for NEE are “Strong Buys,” with no “Sells.”
NEE stock has climbed by 260% in the past decade and 890% in the last 20 years, with a total return of roughly 1,700%. This outperformance includes roughly two and a half years of choppy sideways movement, with NEE trading 15% below its records.
Image Source: Zacks Investment Research
NextEra could be ready to break out of its slump, with it back above its 200-week moving average, as well as its 21-day and 50-day. On the valuation front, NEE trades at a 33% discount to own its highs at 22.8X forward 12-month earnings and not too far above its decade-long median. NextEra is currently trading at its lowest valuation levels over the past three years.
(Disclosure: Ben Rains own NEE in Zacks Alternative Energy Innovators and in his personal portfolio)