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Buy These 3 Highly-Ranked Stocks to Kick Off Earnings Season
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Today’s episode of Full Court Finance at Zacks breaks down where the stock market stands as Wall Street starts the fourth quarter earnings season. The episode then dives into three highly-ranked stocks—Fastenal (FAST - Free Report) , Stride (LRN - Free Report) , and Netflix (NFLX - Free Report) —with strong positions in various industries that investors might want to buy now with their earnings results around the corner.
The S&P 500 and the Nasdaq finished Thursday trading flat, making up ground following earlier losses. Despite slightly hotter-than-projected headline inflation data, Wall Street took comfort in the fact that Core monthly CPI matched projections and Core YoY came in slightly lower than the prior month.
Wall Street is looking beyond any lingering inflation worries to earnings season. The S&P 500 traded just below its all-time highs as JPMorgan and others kick off the busy stretch of Q4 earnings.
Investors appear ready to send the benchmark to new highs in short order. With this in mind, let’s explore three highly-ranked Zacks stocks that are reporting in the coming weeks that investors might want to consider buying for long-term upside.
Fastenal ((FAST - Free Report) ) – Q4 Earnings on January 18
Fastenal is a wholesale distributor of industrial supplies, construction tools, safety products, and beyond, ranging from fasteners and electrical supplies to hardware, building supplies, and much more. FAST offers various distribution and delivery methods, including industrial-style vending machines and other rather unique offerings from roughly 3,400 in-market locations that include local hubs, customer-specific onsite areas, and more.
Image Source: Zacks Investment Research
Fastenal is less vulnerable to the boom-and-bust cycles of the broader industrial and construction segments because it doesn’t sell big-ticket items. Fastenal’s smaller components are key cogs to countless companies and industries at all times. FAST has grown its sales every year since the financial crisis, including 16% sales expansion last year.
Fastenal is projected to post 5% revenue growth in 2023 and 6% higher sales next year to boost its adjusted earnings by 6% both periods. FAST’s positive EPS revisions help it land a Zacks Rank #2 (Buy) right now. The company also boasts an impressive balance sheet that has allowed it to boost its dividend by significant margins recently.
Image Source: Zacks Investment Research
Fastenal stock has soared 950% in the past 20 years vs. its industry’s 687%, and the S&P 500’s 330%. FAST has climbed by 28% in the last 12 months and it recently found support at its 50-day moving average following a pullback. FAST also trades at a 20% discount to its highs at 29.7X forward earnings.
Stride, Inc. ((LRN - Free Report) ) – Q2 FY24 Results on January 23
Stride is a top digital education firm with offerings that reach students of all ages in the U.S. and globally. The company’s various services serve K–12 students and parents, as well as adult learners, school districts, businesses, the military, and beyond.
Stride is more than a pandemic-era success story, growing its revenue from $400 million in 2010 to $1.8 billion last year. LRN shares have also climbed 160% in the last 10 years vs. its Zacks sector’s 13%.
Image Source: Zacks Investment Research
Stride's revenue climbed 9% in its fiscal 2023 and 10% in FY22, after it soared 48% during FY21 (boosted by Covid). LRN crushed our estimates last quarter and provided upbeat guidance, as it benefits from strength in its career learning segment, especially from its middle and high school cohort.
Zacks estimates call for LRN’s revenue to climb another 9% this year and over 6% higher next year, while its adjusted earnings are projected to soar by 35% and 13%, respectively. And its upbeat earnings revisions help it land a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Stride shares have climbed 155% in the last three years to crush the S&P 500’s 25%. The firm’s 30% run in the past three months helped it break above to new highs, yet it still trades 15% below its average Zacks price target.
Stride shares appear even more appealing on the valuation side, trading nearly 80% below their highs and at a 44% discount to their 10-year median at 13.5X forward earnings.
Netflix helped change the entertainment industry forever, altering the way people watch movies and TV shows. NFLX’s vanguard status and growing content library have helped it maintain an edge over Disney ((DIS - Free Report) ), Apple, Amazon, and countless other streamers. Still, the stock got crushed for slowing top expansion and fears about growing competition, as well as worries about possible consolidation in the streaming industry.
Image Source: Zacks Investment Research
Netflix has addressed some of those anxieties, having also beaten our Q1, Q2, and Q3 earnings estimates. Plus, it added 8% more paid membership in Q2 and 11% more in the third quarter to close with over 247 million vs. Disney+ at 150 million.
Netflix’s lower-cost ad-based tier is gaining traction, with some big user growth news recently announced. NFLX is also working to cut down on people sharing too many accounts.
Netflix is projected to grow its revenue by over 6% in 2023 and 14% in FY24 to help boost its adjusted earnings by 22% and 32%, respectively. NFLX’s positive EPS revisions, including freshly upbeat activity, support its Zacks Rank #2 (Buy) status.
Image Source: Zacks Investment Research
Netflix stock has climbed nearly 200% off its lows, yet it still trades 30% below its peaks. Plus, the stock is up 933% in the last decade vs. the tech sector’s 250%. NFLX is also trading above key short-term and long-term moving averages. On the valuation front, Netflix trades at a 60% discount to its 10-year median and 95% below its peaks at 29.8X forward 12-month earnings.
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Buy These 3 Highly-Ranked Stocks to Kick Off Earnings Season
Today’s episode of Full Court Finance at Zacks breaks down where the stock market stands as Wall Street starts the fourth quarter earnings season. The episode then dives into three highly-ranked stocks—Fastenal (FAST - Free Report) , Stride (LRN - Free Report) , and Netflix (NFLX - Free Report) —with strong positions in various industries that investors might want to buy now with their earnings results around the corner.
The S&P 500 and the Nasdaq finished Thursday trading flat, making up ground following earlier losses. Despite slightly hotter-than-projected headline inflation data, Wall Street took comfort in the fact that Core monthly CPI matched projections and Core YoY came in slightly lower than the prior month.
Wall Street is looking beyond any lingering inflation worries to earnings season. The S&P 500 traded just below its all-time highs as JPMorgan and others kick off the busy stretch of Q4 earnings.
Investors appear ready to send the benchmark to new highs in short order. With this in mind, let’s explore three highly-ranked Zacks stocks that are reporting in the coming weeks that investors might want to consider buying for long-term upside.
Fastenal ((FAST - Free Report) ) – Q4 Earnings on January 18
Fastenal is a wholesale distributor of industrial supplies, construction tools, safety products, and beyond, ranging from fasteners and electrical supplies to hardware, building supplies, and much more. FAST offers various distribution and delivery methods, including industrial-style vending machines and other rather unique offerings from roughly 3,400 in-market locations that include local hubs, customer-specific onsite areas, and more.
Image Source: Zacks Investment Research
Fastenal is less vulnerable to the boom-and-bust cycles of the broader industrial and construction segments because it doesn’t sell big-ticket items. Fastenal’s smaller components are key cogs to countless companies and industries at all times. FAST has grown its sales every year since the financial crisis, including 16% sales expansion last year.
Fastenal is projected to post 5% revenue growth in 2023 and 6% higher sales next year to boost its adjusted earnings by 6% both periods. FAST’s positive EPS revisions help it land a Zacks Rank #2 (Buy) right now. The company also boasts an impressive balance sheet that has allowed it to boost its dividend by significant margins recently.
Image Source: Zacks Investment Research
Fastenal stock has soared 950% in the past 20 years vs. its industry’s 687%, and the S&P 500’s 330%. FAST has climbed by 28% in the last 12 months and it recently found support at its 50-day moving average following a pullback. FAST also trades at a 20% discount to its highs at 29.7X forward earnings.
Stride, Inc. ((LRN - Free Report) ) – Q2 FY24 Results on January 23
Stride is a top digital education firm with offerings that reach students of all ages in the U.S. and globally. The company’s various services serve K–12 students and parents, as well as adult learners, school districts, businesses, the military, and beyond.
Stride is more than a pandemic-era success story, growing its revenue from $400 million in 2010 to $1.8 billion last year. LRN shares have also climbed 160% in the last 10 years vs. its Zacks sector’s 13%.
Image Source: Zacks Investment Research
Stride's revenue climbed 9% in its fiscal 2023 and 10% in FY22, after it soared 48% during FY21 (boosted by Covid). LRN crushed our estimates last quarter and provided upbeat guidance, as it benefits from strength in its career learning segment, especially from its middle and high school cohort.
Zacks estimates call for LRN’s revenue to climb another 9% this year and over 6% higher next year, while its adjusted earnings are projected to soar by 35% and 13%, respectively. And its upbeat earnings revisions help it land a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Stride shares have climbed 155% in the last three years to crush the S&P 500’s 25%. The firm’s 30% run in the past three months helped it break above to new highs, yet it still trades 15% below its average Zacks price target.
Stride shares appear even more appealing on the valuation side, trading nearly 80% below their highs and at a 44% discount to their 10-year median at 13.5X forward earnings.
Netflix ((NFLX - Free Report) ) – Q4 Earnings on January 23
Netflix helped change the entertainment industry forever, altering the way people watch movies and TV shows. NFLX’s vanguard status and growing content library have helped it maintain an edge over Disney ((DIS - Free Report) ), Apple, Amazon, and countless other streamers. Still, the stock got crushed for slowing top expansion and fears about growing competition, as well as worries about possible consolidation in the streaming industry.
Image Source: Zacks Investment Research
Netflix has addressed some of those anxieties, having also beaten our Q1, Q2, and Q3 earnings estimates. Plus, it added 8% more paid membership in Q2 and 11% more in the third quarter to close with over 247 million vs. Disney+ at 150 million.
Netflix’s lower-cost ad-based tier is gaining traction, with some big user growth news recently announced. NFLX is also working to cut down on people sharing too many accounts.
Netflix is projected to grow its revenue by over 6% in 2023 and 14% in FY24 to help boost its adjusted earnings by 22% and 32%, respectively. NFLX’s positive EPS revisions, including freshly upbeat activity, support its Zacks Rank #2 (Buy) status.
Image Source: Zacks Investment Research
Netflix stock has climbed nearly 200% off its lows, yet it still trades 30% below its peaks. Plus, the stock is up 933% in the last decade vs. the tech sector’s 250%. NFLX is also trading above key short-term and long-term moving averages. On the valuation front, Netflix trades at a 60% discount to its 10-year median and 95% below its peaks at 29.8X forward 12-month earnings.