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Why Investors Need to Take Advantage of These 2 Retail and Wholesale 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 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.
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 Ulta Beauty?
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. Ulta Beauty (ULTA - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $7.49 a share 10 days away from its upcoming earnings release on March 14, 2024.
ULTA has an Earnings ESP figure of +0.05%, which, as explained above, is calculated by taking the percentage difference between the $7.49 Most Accurate Estimate and the Zacks Consensus Estimate of $7.48. Ulta Beauty 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.
ULTA is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Carvana (CVNA - Free Report) is another qualifying stock you may want to consider.
Carvana, which is readying to report earnings on May 2, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently -$0.82 a share, and CVNA is 59 days out from its next earnings report.
The Zacks Consensus Estimate for Carvana is -$0.86, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +3.93%.
Because both stocks hold a positive Earnings ESP, ULTA and CVNA 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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Why Investors Need to Take Advantage of These 2 Retail and Wholesale 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 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.
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 Ulta Beauty?
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. Ulta Beauty (ULTA - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $7.49 a share 10 days away from its upcoming earnings release on March 14, 2024.
ULTA has an Earnings ESP figure of +0.05%, which, as explained above, is calculated by taking the percentage difference between the $7.49 Most Accurate Estimate and the Zacks Consensus Estimate of $7.48. Ulta Beauty 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.
ULTA is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Carvana (CVNA - Free Report) is another qualifying stock you may want to consider.
Carvana, which is readying to report earnings on May 2, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently -$0.82 a share, and CVNA is 59 days out from its next earnings report.
The Zacks Consensus Estimate for Carvana is -$0.86, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +3.93%.
Because both stocks hold a positive Earnings ESP, ULTA and CVNA 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 >>