11 Stocks That Rarely Miss Earnings … and 3 to Buy

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Retailers take center stage on the earnings podium this week, which means earnings season is nearly at a close. To wit, more than 450 of the S&P 500’s components have made it through their earnings reports.

Looking back, the season has been more positive than analysts had expected — 75% of EPS results have beat the Street, while almost 55% beat on the top line. Average earnings growth for the S&P 500 is now above 2%, too, a far better cry than the flat to negative growth that analysts had forecast.

This better-than-expected earnings season has driven the S&P 500 back to record levels, with the index breaching 1900 today. And while some investors might think the earnings gas tank might be running dry … we say that’s not the case.

We took a quick look at the companies announcing over the next week to find those that have a better-than-average track record for exceeding analysts’ earnings estimates. Of the 88 companies we focused on, 11 have have a strong history (80% of the time or better) of beating the Street.

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As always, we prefer stocks that are underloved by the Street as they often benefit from surges in buying after good news (such as earnings reports that beat expectations) as pessimistic investors turn more bullish.

Similarly, unexpected earnings beats can serve as a catalyst for short-covering rallies, which is why we include the current short interest ratio for each stock. Following our approach, a few stand out ahead of earnings:

Deere (DE)

Deere stock earnings season
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Deere (DE) beats top-line expectations more than 60% of the time and bottom line results almost 85% of instances, so why do investors dislike Deere stock?

To some degree, growth concerns in China have investors on edge, but Deere has been successful in maintain a long history of earnings results. Shares are creeping toward the $100 mark again, which would get the upgrade rolling and the shorts running.

We like Deere stock ahead of Wednesday morning’s for that reason.

Dick’s Sporting Goods (DKS)

DKS stock earnings season
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The retailers have been given a pass this quarter if they just play the weather card as part of their results. Not that we expect Dick’s Sporting Goods (DKS) to do so, but it’s there if needed.

More attractive is the high short interest of 5.2 on a stock that is hovering just below all-time highs.

A positive earnings result next Tuesday — which happens more than 80% of the time — will get DKS stock above $60 in short order.

Applied Materials (AMAT)

AMAT stock earnings season
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Old-school tech is alive again, especially in the semiconductor sector.

Applied Materials (AMAT) shares are breaking above their 50-day moving average ahead of Thursday’s earnings announcement. The company’s history of beating EPS and revenue estimates an average of 80% of the time should be tweaking interest as it combines with a technically bullish chart.

Mix in the low expectations represented by low buy recommendations and high short interest, and you’ve got a good bullish setup that could result in a quick move back to the $21 level for AMAT stock later this week.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/05/11-stocks-earnings-season-dks-amat/.

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