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7 S&P 500-Beating Stocks to Buy Ahead of Q2 Earnings

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The S&P 500 is having a terrific 2019, courtesy of the optimism surrounding a potential cut in U.S. Fed’s benchmark interest rate and expectations of resumption of trade talks between the United States and China.

Notably, the S&P 500 Index closed at 3,004.04 on Jul 16, up 19.8% on a year-to-date basis. The index hit 3000 in intra-day trading for the first time on Jul 10, almost five years after it closed at 2000 on Aug 26, 2014, per Dow Jones Market data, quoted by MarketWatch.

Tariffs to Hurt S&P 500 Earnings Growth

Despite the strong rally, S&P 500 earnings growth is expected to decelerate this time around due to tariffs that continue to squeeze profit margins of enterprises with significant exposure to China.

The technology sector, which has been a major earnings growth driver for S&P 500, bore the brunt of the trade war. Tariffs on electronics due to the U.S.-China trade war negatively impacted demand for chips.

Further, server market growth is expected to suffer due to lower demand from enterprise buyers and hyperscale companies. Weakness in China is a major headwind as well.

The trade war between the two biggest economies of the world has also been blamed for slowing global economic growth. Notably, China’s second-quarter GDP growth of 6.2% was slowest on a year-over-year basis in at least 27 years.

Stocks Outperforming S&P 500 Are Solid Bets

The rally in the S&P 500 is expected to continue driven by an improving macro-economic environment. A possible interest rate cut along with resumption of trade talks between the United States and China is a key catalyst. Moreover, demand for memory chips and server sales are expected to improve in the second-half of 2019, which bodes well for the technology sector.

Here we pick seven stocks that have outperformed the S&P 500 composite on a year-to-date basis. These are likely to beat second-quarter earnings estimates, given the favorable combination of a Zacks Rank #1 (Strong Buy) and a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our research shows that for stocks with the combination of a Zacks Rank #1, 2 (Buy) or 3 (Hold) and positive Earnings ESP, the chance of an earnings beat is as high as 70%. You can also uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

These stocks are expected to climb further after their earnings release.

Our Picks
 
Bermuda-based RenaissanceRe Holdings (RNR - Free Report) is scheduled to report results on Jul 23. The stock has returned 38.7% on a year-to-date basis.

The company has an Earnings ESP of +2.16%.

The Zacks Consensus Estimate for earnings has jumped 11.5% to $3.58 over the past month.

RenaissanceRe Holdings Ltd. Price and EPS Surprise


Bethesda, MD-based Lockheed Martin (LMT - Free Report) is also scheduled to report on Jul 23. The company has an Earnings ESP of +0.14%.

The Zacks Consensus Estimate for earnings has increased by a couple of cents to $4.74 over the past 30 days.

Lockheed Martin stock has returned 39.5% year to date.

Lockheed Martin Corporation Price and EPS Surprise


Houston, TX-based Helix Energy Solutions (HLX - Free Report) has an Earnings ESP of +13.33%. The stock has returned 49.4% on a year-to-date basis.

The company is set to report results on Jul 24. The consensus mark for earnings has been unchanged at 15 cents over the past 30 days.

Helix Energy Solutions Group, Inc. Price and EPS Surprise


Chicago, IL-based John Bean Technologies (JBT - Free Report) has an Earnings ESP of +2.33%. The company is scheduled to report on Jul 29.

The consensus mark for earnings has increased by a penny to $1.08 over the past 30 days.

John Bean Technologies stock has returned 70.2% year to date.

John Bean Technologies Corporation Price and EPS Surprise


Denver, CO-based M.D.C. Holdings has an Earnings ESP of +3.96%.

The company is scheduled to report results on Jul 31. The consensus mark for earnings has increased 5.6% to 76 cents over the past 30 days.

The stock has returned 43.6% on a year-to-date basis.

M.D.C. Holdings, Inc. Price and EPS Surprise


Charlotte, NC-based DENTSPLY SIRONA (XRAY - Free Report) is set to report on Aug 2. The company has an Earnings ESP of +6.95%.

The Zacks Consensus Estimate for earnings has been steady at 62 cents over the past 30 days.

DENTSPLY SIRONA has returned 51.8% year to date.

DENTSPLY SIRONA Inc. Price and EPS Surprise

Panama City- based Copa Holdings, S.A. (CPA - Free Report) is set to report results on Aug 7. The stock has returned 31% on a year-to-date basis.

The company has an Earnings ESP of +6.76%.

The Zacks Consensus Estimate for earnings has increased by a couple of cents to $1.03 over the past 30 days.

Copa Holdings, S.A. Price and EPS Surprise

 

Today's Best Stocks from Zacks

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