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Why Investors Need to Take Advantage of These 2 Computer and Technology Stocks Now
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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.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Synopsys?
The final step today is to look at a stock that meets our ESP qualifications. Synopsys (SNPS - Free Report) earns a #2 (Buy) nine days from its next quarterly earnings release on November 29, 2023, and its Most Accurate Estimate comes in at $3.07 a share.
Synopsys' Earnings ESP sits at +0.94%, which, as explained above, is calculated by taking the percentage difference between the $3.07 Most Accurate Estimate and the Zacks Consensus Estimate of $3.04. SNPS is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
SNPS is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Applied Materials (AMAT - Free Report) .
Slated to report earnings on February 15, 2024, Applied Materials holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.89 a share 87 days from its next quarterly update.
The Zacks Consensus Estimate for Applied Materials is $1.87, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.97%.
SNPS and AMAT'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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Why Investors Need to Take Advantage of These 2 Computer and Technology Stocks Now
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.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Synopsys?
The final step today is to look at a stock that meets our ESP qualifications. Synopsys (SNPS - Free Report) earns a #2 (Buy) nine days from its next quarterly earnings release on November 29, 2023, and its Most Accurate Estimate comes in at $3.07 a share.
Synopsys' Earnings ESP sits at +0.94%, which, as explained above, is calculated by taking the percentage difference between the $3.07 Most Accurate Estimate and the Zacks Consensus Estimate of $3.04. SNPS is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
SNPS is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Applied Materials (AMAT - Free Report) .
Slated to report earnings on February 15, 2024, Applied Materials holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.89 a share 87 days from its next quarterly update.
The Zacks Consensus Estimate for Applied Materials is $1.87, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.97%.
SNPS and AMAT'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 >>