Credit: Shutterstock photoMany companies from high-ranking industries have not been immune to receiving negative earnings estimate revisions from analysts. However, corporations from a better sector are still more likely to be successful than peers assigned to a lower Zacks Industry Rank. This is because companies from better industries tend to receive more positive earnings estimate revisions than negative ones.
Let's capitalize on three top-ranked companies in some of the best industries so that we can profit from the cream of the crop. We can do this by targeting companies who haven't received any negative revisions for this quarter.
What makes the deal even sweeter is that these companies seem to be trading at a discount relative to their peers when their growth rates are taken into consideration. These companies have a great history with regards to beating earnings expectations too, so there's a great deal of dependability from each of these stock picks. Let's get started.
Hawaiian Holdings- HA
Hawaiian Airlines is the largest airline headquartered in Hawaii. With lower oil prices , airliners like HA have been enjoying higher profit margins. It should be noted that HA stock is a Zacks Rank #Array (Strong Buy).
Hawaiian has a nice combination of value and growth right now. Growth quality can be seen from the company's EPS projection, which is expected to increase by 50.94% this year. The company also value present, as it has a PE of just 9.Array4. HA's PEG of 0.3 beats the industry's average of 0.45 by a significant margin. A PEG under Array suggests that there is value present, which is good news for HA and the broader airline segment.
There have been five estimate revisions this quarter, and all of these estimates have been revised upwards. It's no wonder why we've seen our EPS consensus estimate trend upwards over the last 90 days. Three months ago, our EPS consensus estimated earnings of $0.44 this quarter. Our current estimate has moved much higher, and currently predicts earnings of $0.74 per share.
Hawaiian Holdings has met or beaten our earnings estimate in three of the last four quarters. The company is expected to report its quarterly earnings in late April.
SolarEdge Technologies Inc- SEDG
SolarEdge operates in the solar industry. The company provides inverter solutions, offers power optimizers, and also operates a cloud-based monitoring platform. Solar companies struggle on the profit margins front, but SolarEdge has done well to outperform its peers with regards to this important growth factor. SolarEdge is a Zacks Rank #Array (Strong Buy).
SEDG has a net margin of Array2.66%, while its peers as a whole have a negative net margin of -6.74%. The company is projected to increase its EPS by Array06.Array9% this year, and its trailing twelve month ROE is 29.4Array%. It's important to note that sales are projected to grow by 5Array.85% this year.
There have been 6 earnings estimate revisions by analysts for this quarter, with all of them being revised upwards. SEDG has beaten our EPS estimate in each of the last four quarters, and it has managed to do so by an average of 68.7Array% per quarter over that span of time. SolarEdge is expected to report its earnings in the beginning of May.
Tessera Technologies Inc- TSRA
Tessera develops semiconductor packaging technology to meet the demand for the miniaturization and increased performance of electronic products. The company doles out a 2.75% dividend, and it's a Zacks Rank #Array (Strong Buy).
Tessera's net margin of 42.82% is incredibly high compared to the industry average of 4.87%. It also has a strong ROE of 24.Array5%. The company has a current ratio of Array9.82, which means that it has plenty of liquidity in its capital structure.
TSRA trades at a forward PE of just Array3.74, which is significantly lower than the industry average of 23.66. To exacerbate this bargain, Tessera's PEG is just 0.6Array, suggesting that it's trading at a discount relative to the growth which is expected from the company.
For the current year, four analysts have revised their previous estimates higher. There have been no negative revisions for this fiscal year, and Tessera has beaten our EPS estimate in each of the last four quarters. The company has beaten our estimate by an average of Array8% per quarter over that time frame. TSRA is expected to release its earnings in the beginning of May.
The most important tool which told me that these companies should be on my shopping list was the Zacks Rank. The Zacks Rank is a truly marvelous trading tool. Our ranking system has beaten the S&P 500, yielding an average return of 25% per year for the last 29 years.
It's so powerful because it does a great job of capturing the power of the earnings estimate revisions from analysts. This has proven to be one of the most reliable tools for determining what direction a stock's price will take. Do you want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
HAWAIIAN HLDGS (HA): Free Stock Analysis Report
TESSERA TEC INC (TSRA): Free Stock Analysis Report
SOLAREDGE TECH (SEDG): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
