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5 Must-Buy Stocks Ahead of Earnings Results This Month

Wall Street is reeling under severe volatility since the beginning of August due to uncertainty related to trade-related conflicts, which resulted in the inversion of the main treasury yield curve.

Yields on the 2-year and the 10-year U.S. Treasury Notes inverted on Aug 14, for the first time since December 2005, raising concerns about an impending recession in the U.S. economy. However, the yield curve steadied the next day.

Meanwhile, second-quarter 2019 earnings results have so far come in better than expected. In spite of a prolonged trade conflict with China and limited hope of any near-term solution to the tariff war, there hasn’t been any broad-based decline in earnings although the pace has slowed. In line with better-than-expected earnings reports, five companies are set to beat earnings estimates this month.

Second-Quarter 2019 Earnings Results at a Glance

As of Aug 16, 460 S&P 500 members reported second-quarter earnings results. Total earnings for these 460 index members are up 0.4% from the same period last year on 4.8% higher revenues. Notably, 75.2% companies surpassed EPS estimates while 57.2% beat revenue estimates.

At present, total second-quarter earnings for the S&P 500 Index are expected to be up 0.2% from the prior-year period on 4.7% higher revenues. This is a massive improvement from an earnings decline of 3.4% on 3.9% higher revenues, expected in the beginning of the second-quarter earnings session.

Notably, Wall Street had witnessed negative earnings (0.2% earnings decline on 4.2% higher revenues) in the first quarter for the first time since the second quarter of 2016. (Read More: Retail Earnings in Focus)

5 Stocks Set to Beat on Earnings This Month

At this stage, it will be prudent to invest in stocks with a favorable Zacks Rank and positive Earnings ESP. Strong earnings results will likely ensure a northbound move in stock prices of these companies in the near term despite market volatility.

We have narrowed down our search to five companies, which will release their earnings results this month. Each of these stocks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy) and popped in the past six months. 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 #3 (Hold) or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%.

Sea Ltd. SE is engaged in the digital entertainment, e-commerce and digital financial service businesses in Taiwan, Thailand, Vietnam, Indonesia and internationally. Sea Ltd. has an Earnings ESP of +4.35% for second-quarter 2019 and sports a Zacks Rank #1.  

The company has an expected earnings growth rate of 1.7% for the current quarter. The Zacks Consensus Estimate for the current quarter and year improved 3.3% and 5.7%, respectively, over the last 60 days.

The company delivered positive earnings surprise in two out of the last four quarters, with an average beat of 7.3%. The stock has jumped 123.6% in the past six months. Sea Ltd. is expected to release earnings results on Aug 20, before the opening bell.



Target Corp. TGT operates large-format general merchandise and food discount stores in the United States, which include Target and SuperTarget stores. Target has an Earnings ESP of +1.04% for second-quarter 2019 and carries a Zacks Rank #2.

The company has an expected earnings growth rate of 9.5% and 9.8% for the current quarter and year, respectively. The company delivered positive earnings surprise in three out of the last four quarters, with an average beat of 2.6%. The stock has surged 15.8% in the past six months. Target is expected to release earnings results on Aug 21, before the opening bell.



1-800-FLOWERS.COM Inc. FLWS provides gourmet food and floral gifts for various occasions in the United States. It operates in three segments: Consumer Floral, Gourmet Foods & Gift Baskets; and BloomNet Wire Service. 1-800-FLOWERS.COM has an Earnings ESP of +6.67% for the fourth quarter of fiscal 219 and a Zacks Rank #2.

The company delivered positive earnings surprise in the last four quarters at an average of 11.3%. The stock has gained 5.3% in the past six months. 1-800-FLOWERS.COM is expected to release earnings results on Aug 22, before the opening bell.



Burlington Stores Inc. BURL operates as a retailer of branded apparel products in the United States. It offers fashion-focused merchandise, including women's ready-to-wear apparel, accessories, footwear, menswear, youth apparel, coats, toys, and gifts, as well as baby, home and beauty products.  Burlington Stores has an Earnings ESP of +1.13% for second-quarter 2019 and carries a Zacks Rank #2.

The company has an expected earnings growth rate of 8.9% for the current year. The Zacks Consensus Estimate for the current quarter improved 0.1% over the last 60 days.

The company delivered positive earnings surprise in the last four quarters at an average of 8.7%. The stock has gained 5.4% in the past six months. Burlington Stores is expected to release earnings results on Aug 29, before the opening bell.



The Cooper Companies Inc. COO operates as a medical device company worldwide. It operates through CooperVision and CooperSurgical business units. The Cooper Companies has an Earnings ESP of +1.50% for the third quarter of fiscal 2019 and carries a Zacks Rank #2.

The company has an expected earnings growth rate of 5.3% and 6.8% for the current quarter and year, respectively. The Zacks Consensus Estimate for the current year improved 0.3% over the last 60 days.

The company delivered positive earnings surprise in two out of the last four quarters, with an average beat of 4%. The stock has surged 17.9% in the past six months. The Cooper Companies is expected to release earnings results on Aug 29, after the closing bell.



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