Earnings season is an exciting time for investors as it is
during these periods that fundamentally superior stocks rack up
their biggest gains. What I look for every earnings season is
stocks with not only the highest year-over-year earnings and sales
growth, but also the ones with the most aggressive upward earnings
report revisions. If analysts are scrambling to lift their
estimates of how high a company's profits will actually be, it's a
good sign that the company will post earnings figures in excess of
analysts' predictions. And when it comes to earnings reports,
investors like to be pleasantly surprised.
So I'm going to preview five of the best stocks picks on the
market for this earnings season. They have the most aggressive
upward earnings revisions and are fundamentally superior plays. I'm
also going to give you the names of five earnings dogs that are
likely to completely miss the mark and that should be avoided at
all costs this earnings season.
5 Earnings Season Winners Western Refining Inc. (WNR)
Oil stocks have really taken off in the past few weeks with the
events in Libya and other countries in the Middle East. Economists
are getting worried about global supply shocks, but investors are
getting excited about the huge profits that can be reaped in oil
and gas plays.
As we near earnings season, I would advise you to begin picking
up some oil and gas plays as these companies are receiving some of
the most aggressive upward earnings revisions. Oil companies are
benefiting from the rising price of oil, and the extra profits they
book on these sales will be reflected in their results for the
current quarter. One of these companies is
Western Refining Inc.
WNR is an independent crude oil refiner that operates in the
western and southern parts of the United States. The company owns
150 service stations and also distributes oil on the wholesale
level to construction, manufacturing and agricultural companies.
These industries are really starting to pick up, and with the
increased business the company will receive from these industries,
Western Refining will likely increase its profits
For the current quarter, analysts are expecting WNR to post
earnings of 27 cents per share, up significantly from its
35-cent-per-share loss last year. In fact, just two months ago,
analysts had been expecting the company to post earnings of just 3
cents per share, indicating that analysts also think WNR will
benefit from the windfall in oil prices. This is a very strong play
going into earnings season.
WNR scheduled to report earnings on May 5.
Advanced Photonix Inc. (API)
Advanced Photonix Inc.
) is a stock that's really starting to show some potential as we
near its earnings announcement. I just recently started following
this stock, but I'm already very excited for its prospects.
API is a thinly traded technology company that makes
optoelectronic devices, which are machines that can source, detect
and control light. These devices are used in light-emitting diodes
(LEDs), fiber optic cables and photovoltaic (solar) cells. The
applications for these gadgets are numerous and are in some of the
hottest industries on the market right now.
That's why earnings expectations for API have improved so
dramatically over the past year. The company posted a loss in each
of the past four quarters, but this quarter analysts are expecting
it to post break-even results. While this may not sound so great,
breaking even is a triumph for companies operating in
"next-generation" industries, and would be the first step for this
company to posting results well in the black.
Analysts continue to revise their estimates higher on this
stock, and API could very well surprise investors and post positive
results when it announces. This is a great tech stock, and I would
definitely recommend adding it to your portfolio before its
API is scheduled to report earnings on June 27.
Neurocrine Biosciences Inc. (NBIX)
The next top stock on my radar for the coming earnings season is
expected to post a 125% year-over-year increase in earnings.
Neurocrine Biosciences Inc.
) is a biotechnology company that studies and develops treatments
for neurological and endocrine-related diseases like depression and
The company has several products in clinical development,
including ones for mood disorders and cardiovascular disease. The
important thing to remember about biotechnology companies is that
they tend to pop when positive news is released about one of their
drugs, e.g., if the government gives them approval for their
treatments. Seeing as this company has several drug therapies in
the queue, there are quite a few opportunities for us to get a
bounce on this stock.
Analysts are expecting earnings of 5 cents per share for the
current quarter and even greater earnings in the quarters ahead.
This stock could be on the cusp of a great run-up, so if you're
going to buy shares, do so now before the crowd catches wind of
NBIX is scheduled to report earnings on April
LSB Industries Inc. (LXU)
LSB Industries Inc.
) is another one of the companies that's jumping onto my radar this
earnings season. The company makes products primarily for two
industries: chemicals and climate control. For the chemicals
industry, it makes various chemical solutions that it sells to
agricultural companies, miners and electronics manufacturers. For
the climate control industry, it makes various heating, ventilation
and HVAC products.
The company has been around for a while, but it continues to
surprise investors. Just last quarter it posted a 182% earnings
surprise and, since that time, analysts have been aggressively
revising their estimates higher. Experts are now predicting
earnings of 59 cents per share when the company announces results
for the first quarter, up from their previous estimate of 37 cents
per share just three months ago. Year-over-year, this would
represent a nearly 750% increase!
This stock really packs a punch and would be a great addition to
any portfolio this earnings season.
LXU is scheduled to report earnings on May 2.
CVR Energy Inc. (CVI)
When you invest in stocks, it is very important to stay
diversified. That is why I always recommend that you pick stocks
from a variety of sectors and that you not be overweighted in one
industry. At the same time, however, it is important to follow the
growth, and this is especially true during earnings season. Well,
this earnings season, much of the growth will be in oil and gas
stocks. These companies are likely going to post the biggest
earnings surprises due to the recent geopolitical crises that have
sent up the price of oil. With that in mind, I've got another oil
and gas recommendation for you.
CVR Energy Inc.
) keeps popping up on my screens. This company, like WNR, refines
and sells transportation fuels in the United States. It operates
primarily in the central part of the country, and also produces and
sells nitrogen fertilizer for agriculture.
The United States is increasingly exploring its energy
independence, and companies like CVR are going to benefit from an
increased reliance on domestic oil. Also, with the disastrous
effects of floods and droughts throughout the world, countries will
be looking to the United States to make up for shortfalls in the
agricultural system. This will also benefit CVR as more
agricultural companies buy its fertilizer.
In January, analysts had been predicting earnings of 22 cents
per share for this company. Today, they're saying this company will
post earnings of 64 cents per share. This is an incredible
increase, and even still, analysts keep moving their targets
higher. CVR could post a substantially higher number, and this
would give investors a very welcomed surprise this earnings
CVI is scheduled to report earnings on May 3.
5 Earnings Season Dogs Tier Technologies Inc. (TIER)
Tier Technologies Inc.
) is in a race to the bottom. Just last year, I rated it a "B"
("buy") on my
, but now it gets a solid "F" ("strong sell"). Its earnings
expectations are terrible, and investors are running away from this
stock like there's no tomorrow. Expectations are for a
7-cent-per-share loss in the current quarter, down from a prior
projection of a 1-cent-per-share loss, and this company could very
well even miss that estimate given that it has missed estimates,
sometimes by triple-digit percentages, in each of the past four
TIER is scheduled to report earnings on May 11.
BioMarin Pharmaceutical Inc. (BMRN)
BioMarin Pharmaceutical Inc.
) makes outstanding products that help thousands of people
suffering from rare diseases, but just because the company is doing
good doesn't mean that its financials are faring well. The company
is expected to post a loss of 10 cents per share in the current
quarter. This is down from previous estimates by analysts of $0 per
share. Looking back over past quarters, this company's performance
has been somewhere erratic, so I would recommend that you stay away
from this stock until it stabilizes.
BMRN is scheduled to report earnings on April
Limelight Networks Inc. (LLNW)
Limelight Networks Inc.
) delivers content for emerging media companies in the United
States, Europe and Asia. The company is on the cutting edge of a
new industry, but it still hasn't figured out how to make an
For the current quarter, analysts are expecting a
5-cent-per-share loss, and estimates keep getting revised downward.
I say that you should stay clear of this stock for the time
LLNW is scheduled to report earnings on May 5.
MarineMax Inc. (HZO)
) is a stock that I wish were doing better because it would mean
that more people were spending time recreational boating. The
company's products range from cruisers to yachts to fishing boats,
but if you want to be able to afford one of its boats for yourself
one day, I would recommend that you find another stock to invest
in. Analysts are expecting the company to report a
10-cent-per-share loss in the current quarter, and the stock gets a
solid "F" on Portfolio Grader.
HZO is scheduled to report earnings on April 25.
Cogdell Spencer Inc. (CSA)
Unlike the rest of the stocks on this "earnings dogs" list,
Cogdell Spencer Inc.
) is actually expected to post a profit in the current quarter. The
reason it finds itself on this list is that analysts have been
revising their profit estimates downward. This is a big red flag to
me as it suggests that the company will post a negative earnings
surprise when it reports. Cogdell is a real estate investment
company, and I think the housing industry is still too volatile to
invest in real estate stocks at this time.
CSA is scheduled to report earnings on May 5.
If you have any questions about whether your stock picks have
what it takes to post solid numbers in the quarter ahead, run them
and make sure you check to see if analysts are revising estimates