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How to Boost Your Portfolio with Top Basic Materials Stocks Set to Beat Earnings
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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive 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 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.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% 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 Agnico Eagle Mines?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Agnico Eagle Mines (AEM - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $0.52 a share 29 days away from its upcoming earnings release on February 15, 2024.
AEM has an Earnings ESP figure of +11.96%, which, as explained above, is calculated by taking the percentage difference between the $0.52 Most Accurate Estimate and the Zacks Consensus Estimate of $0.46. Agnico Eagle Mines is one of a large database 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.
AEM is part of a big group of Basic Materials stocks that boast a positive ESP, and investors may want to take a look at Nucor (NUE - Free Report) as well.
Nucor is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on January 29, 2024. NUE's Most Accurate Estimate sits at $2.83 a share 12 days from its next earnings release.
For Nucor, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.81 is +0.83%.
Because both stocks hold a positive Earnings ESP, AEM and NUE could potentially post earnings beats in their next reports.
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
Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive 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 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.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% 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 Agnico Eagle Mines?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Agnico Eagle Mines (AEM - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $0.52 a share 29 days away from its upcoming earnings release on February 15, 2024.
AEM has an Earnings ESP figure of +11.96%, which, as explained above, is calculated by taking the percentage difference between the $0.52 Most Accurate Estimate and the Zacks Consensus Estimate of $0.46. Agnico Eagle Mines is one of a large database 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.
AEM is part of a big group of Basic Materials stocks that boast a positive ESP, and investors may want to take a look at Nucor (NUE - Free Report) as well.
Nucor is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on January 29, 2024. NUE's Most Accurate Estimate sits at $2.83 a share 12 days from its next earnings release.
For Nucor, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.81 is +0.83%.
Because both stocks hold a positive Earnings ESP, AEM and NUE could potentially post earnings beats in their next reports.
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 >>