Once again, earnings season has snuck up on us.
The second quarter’s earnings reports will unofficially start to flow after the close on Wednesday, when Alcoa (AA) is slated to post last quarter’s numbers and get the earnings ball rolling.
While Alcoa hasn’t earned a spot on the list of stocks to buy specifically because of their upside potential after — maybe even before — upcoming earnings reports, there are a handful of names worth consideration that will be posting numbers within the next couple of weeks.
In fact, here’s a closer look at some of the best bets that could be catapulted on earnings news.
3 Stocks to Buy That Could Fly After Earnings News: Walgreens Boots Alliance (WBA)
With year-over-year earnings projected to fall just a bit for its fiscal Q3, Walgreens Boots Alliance (WBA) doesn’t seem like it should belong on a list of stocks to buy in anticipation of fireworks following its earnings announcement due on Thursday of this week. The company has topped estimates in its past two quarters, however, and obliterated them in fiscal Q2. Another big beat could be in the making, with last year’s union of Walgreens and Boots already paying off nicely.
The kicker, however, that could really make Walgreens Boots Alliance buy-worthy is the likelihood of similar mergers and acquisitions in the foreseeable future.
In March, Walgreens Boots Alliance executive vice chairman and acting CEO, Stefano Pessina, noted in the wake of the still-fresh Boots/Walgreens pairing a few months ago, “The next big one will probably be in the U.S. because it is such a big market. It is a fascinating market.”
The fact that Pessina is even thinking in terms of where suggests he’s already got something in mind. Given how well the Boots deal is working out, any hint regarding upcoming acquisitions could easily earn WBA a spot on the roster of stocks to buy after its numbers are posted.
3 Stocks to Buy That Could Fly After Earnings News: Wells Fargo (WFC)
JPMorgan Chase (JPM), Bank of America (BAC) and Wells Fargo (WFC) will all post last quarter’s earnings report next week. In fact, we’ll hear from all three big banks in the span of just two days — Tuesday and Wednesday.
While analysts expect good numbers from all three, all are not necessarily great stocks to buy simply based on their post-earnings potential. That honor solely belongs to Wells Fargo.
Yes, Wells Fargo was one of the companies recently fined by FINRA for overcharging some mutual fund customers. Wells Fargo was also recently limited by the U.S. Office of the Comptroller of Currency in the number of new purchases of mortgage service rights it is allowed to purchase because the OCC is still not satisfied with how the bank has handled the mortgage abuse settlements awarded in 2013.
They’re bruises to the company’s ego, more so than bruises to the company’s bottom line, though. The fact is, Wells Fargo is an earnings machine, with the vast majority of its recent earnings reports indicating growth, with 10 of the past 12 earnings reports rolling in above expectations. (It merely met expectations in the other two quarters.)
3 Stocks to Buy That Could Fly After Earnings News: Mattel (MAT)
Toymaker Mattel (MAT) isn’t expected to post a profit when it reports earnings for its second quarter next Thursday, July 16th. Investors counting on an earnings beat will likely be disappointed. Still, Mattel is one of only a handful of stocks to buy on the heels of its earnings news. The stock may well be prodded by the rhetoric surrounding MAT after the earnings report is posted and the conference call is over.
In simplest terms, Mattel is in the midst of a much-needed turnaround. In its second year of deteriorating results, new top-management was finally brought into the fold in April. Even before a new CEO and COO were named, however, there was already a glimmer of hope for Mattel’s turnaround efforts. That is, Q1’s sales as well as earnings topped estimates.
What could really light a fire under the stock, however, isn’t just a corporate overhaul. A major motion picture is almost certain to stir the pot in a bullish manner for Mattel over the remainder of 2015.
Yes, it’s Star Wars.
After a decade-long hiatus, one of the most successful movie franchises of all time is set for reprisal when Episode 7 of the series — The Force Awakens — debuts in December. Mattel is already in the thick of the toy tie-ins, which could (almost needless to say) be huge.
Though details are still a bit scant, we have seen a handful of new related merchandise from the Star Wars franchise, with more movie-specific toys sure to emerge as the release date for the film approaches.
With this kind of catalyst in the cards at the same time the company is finally getting traction with its turnaround efforts, MAT could finally come alive again after struggling since 2013. It just needs a nudge, and the post-earnings response may well be it.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.