Markets

4 Top Stocks with Winning Streaks for Earnings Season

A pen and a pair of glasses on top of a graph
Credit: Shutterstock photo

The third-quarter earnings season will soon be underway, bringing along surprises and disappointments. The world of finance rolls around this quarterly data, for obvious reasons.

So far, 2015 has not been smooth sailing for the U.S. stock market given a flurry of macro headwinds including the oil price slump and a slowdown in the Chinese economy. All three major indices have delivered weak performances year-to-date. Dow Jones Industrial Average, S&P 500 and Nasdaq are down roughly 9%, 7% and 3%, respectively, so far this year. The move by the Federal Reserve not to raise interest rates at its meeting last month has injected more uncertainty into the market.

Outlining Earnings Estimates

The second quarter witnessed a weak performance, with total earnings for the S&P 500 index declining 2.1% from the same period last year on 3.4% lower revenues. Circumstances aren't likely to improve much in the third quarter, as S&P 500 companies are expected to deliver earnings decline of 5.8% compared with the same period last year on 3.9% lower revenues.

No doubt, Energy remains the biggest drag in the third quarter, as has been the trend in recent quarters, with total Energy sector earnings expected to be down 65.3% on 37.2% lower revenues. There isn't much growth momentum in other major sectors either, apart from Finance and Medical.

Further, there is still plenty of time left for more downward revisions, which could possibly take the full-year 2015 growth rate into the negative territory.

Factors to Consider This Quarter

Needless to say, the health of the broader economy has an impact on the performance of companies. Although the U.S. economy has been relatively steadier with an improving housing market, increasing consumer confidence and rising economic activities, the stock market is caught in a web of uncertainty, owing to macroeconomic headwinds along with a combination of factors such as a weakness in the energy space, a strong U.S. dollar and insipid global growth - particularly in China.

Bright Side

Amid these uncertainties, investors are looking for winners. No doubt plenty of companies will rise above all odds and emerge as winners this season. While not everry company that posts positive earnings surprises witnesses a gain in stock price, studies show that on an average, earnings beats drive strong returns in share prices for several weeks following the report. Picking out and investing in such stocks ahead of their earnings releases can boost your portfolio returns.

The Zacks Advantage

While it is impossible to figure out with full conviction which stocks would possibly beat estimates this earnings season and which ones will disappoint, our proprietary system makes it relatively easy.

With the help of our Zacks Stock Screener , we have shortlisted 4 stocks that sport a Zacks Rank #1 (Strong Buy) and have delivered average EPS surprise of more than 25% over the last four quarters.

All these stocks look set to continue their winning streak in the soon-to-be reported quarter.

4 Winning Stocks to Watch For

CyberArk Software, Ltd.CYBR

CyberArk Software provides information technology security solutions. Its products include CyberArk Shared Technology Platform, Privileged Account Security Solution and Sensitive Information Management Solution. The company offers services which protect organizational privileged accounts from cyber-attacks consisting of enterprise password vault, privileged session manager that protects IT assets; and application identity manager.

The software provider has delivered a massive average earnings surprise of about 987.50% over the past four quarters. The stock has also witnessed positive earnings estimate revision for the to-be-reported quarter of around 12.5% in the past 60 days and currently sports a Zacks Rank #1.

ICU Medical, Inc.ICUI

ICU Medical engages in the development, manufacture and sale of proprietary, disposable medical connection systems for use in intravenous therapy applications. The company's intravenous connectors are designed to prevent accidental disconnection's of intravenous lines and to protect healthcare workers and their patients.

The company has delivered an amazing average earnings surprise of about 82.95% over the past four quarters. The stock has witnessed positive earnings estimate revision of over 23% for the to-be-reported quarter in the past 60 days and currently sports a Zacks Rank #1.

Douglas Dynamics, Inc.PLOW

Douglas Dynamics designs, manufactures and sells snow and ice control equipment for light trucks, comprising snowplows and sand and salt spreaders, and related parts and accessories. The company sells its products under the WESTERN, FISHER and BLIZZARD brands through a distributor network to professional snowplowers.

The company has delivered average earnings surprise of about 71.22% over the past four quarters. The stock has witnessed a strong positive earnings estimate revision of nearly 58% for the to-be-reported quarter in the past 60 days and currently sports a Zacks Rank #1.

Express Inc.EXPR

Express is a specialty retailer of women's and men's apparel in the U.S. The company operates retail outlets in high-traffic shopping malls, lifestyle centers and street locations across the U.S. It also sells its products through its e-commerce website, express.com.

The company has delivered an average earnings surprise of 34.15% over the past four quarters. The stock has also witnessed positive estimate revision for the to-be-reported quarter of around 20.8% in the past 60 days and currently sports a Zacks Rank #1.

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

EXPRESS INC (EXPR): Free Stock Analysis Report

DOUGLAS DYNAMIC (PLOW): Free Stock Analysis Report

ICU MEDICAL INC (ICUI): Free Stock Analysis Report

CYBER-ARK SFTWR (CYBR): Free Stock Analysis Report

To read this article on Zacks.com click here.

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.

In This Story

ICUI PLOW CYBR EXPR

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More