Netflix, Inc. (NASDAQ:NFLX) may be plunging 14% right now. But don’t let that faze you. There is a reason why the Street has always been cautious about investing in Netflix. Even now I can see that top analysts only have a cautiously optimistic Buy rating on NFLX. And post-plunge they are still only modelling for 4% upside potential from current levels. Netflix is still expensive full stop.
So let’s move on from NFLX because there are plenty of attractive stock ideas out there. The five stocks covered below are all primed to rally on strong earnings. These are killer stocks with plenty of long-term growth potential. Indeed, here I use TipRanks’ market data to ensure that each one of these stocks scores a bullish ‘Strong Buy’ analyst consensus rating. This is from top analysts who know what they are talking about.
Still feel unconvinced? Note that Tony Dwyer, chief market strategist at Canaccord Genuity, believes the upcoming earnings season will be ‘unbelievable.’ This makes Netflix the exception rather than the rule. He told CNBC “This quarter alone we’re probably going to be close to 24 percent growth rate versus a year ago in S&P operating profits.”
With this in mind, let’s take a closer look at these top 5 earnings stocks now:
Top Earnings Stocks: Zions Bancorp (ZION)
This Utah-based bank, which boasts assets of over $65 billion, is out with its earnings results on July 23. Five-star Vining Sparks analyst Marty Mosby likes what he sees when it comes to bank earnings results so far.
“We believe that all 4 of the Large Cap U.S. Bank earnings announcements today along with the stock price reaction was a favorable sign for our “Bullish” investment thesis for the Large Cap U.S. Banks over the second half of this year.” Here he is referring to J P Morgan Chase & Co (NYSE:JPM); PNC Financial (NYSE:PNC); Citigroup Inc. (NYSE:C) and Wells Fargo & Company (NYSE:WFC).
And with the green light from these banks, Mosby is confident this bullish scenario will continue to play out with Zions Bancorp (NASDAQ:ZION) in the coming week. “We look forward to hopefully being able to highlight the beginning of a rebound in the stock prices for the Super Regional and Trust Banks, especially over the next couple of weeks” Mosby wrote on July 14.
He highlights Zion as a top stock set to bounce on earnings. Moreover, he’s not just positive on this quarter. Mosby argues that Zion is on track to increase operating earnings per share up by another 40% before the year-end. And in turn, this should push its stock price up above $60. Indeed, this five-star analyst has a ‘Strong Buy’ rating on Zion with a $65 price target (26% upside potential).
“We believe ZION should continue to produce one of the strongest improvements in its return-on-tangible common equity, as it continues to drive meaningful revenue growth, generate positive operating leverage, and lower its tax rate” he concludes.
Top Earnings Stocks: Facebook (FB)
Social media giant Facebook, Inc. (NASDAQ:FB) is out with its second quarter data on July 25. So far the signs are bullish that this is going to be another killer earnings season for FB. Note that this is a stock already up 18% since its Q1:18 earnings call (after increasing 9% on the print), while the S&P 500 is up only 4%. This sets the stock up favorably for a post-earnings rally.
Plus we can see that analysts are almost unanimously bullish on the stock going into the print. Out of 28 recent analyst ratings, a whopping 27 are bullish with only 1 analyst choosing to remain on the sidelines.
Top Jefferies analyst Brent Thill has just ramped up his price target from $215 to $240. Thill explains: “We see continued strength from advertisers seeking the best ROI online and FB continuing to deliver best-in-class capabilities for advertisers.” And at the same time, Facebook’s “continued strength in pricing, growth in Instagram provides upside to 2Q numbers.”
Most notably, Thill is keeping a close eye on the launch of Instagram TV which he believes has big money-making potential. He is looking for Q2 revenue of $13.303 billion, just topping the $13.287 billion consensus estimate.
The best part is that FB is still trading at discount prices. “On valuation, FB currently trades at 20X 19E P/E (~19X excl. cash) — cheap for what is a 30%+ EPS CAGR” writes RBC Capital’s Mark Mahaney. He has a $250 price target on the stock (21% upside potential).
Top Earnings Stocks: Raytheon (RTN)
Top RBC Capital analyst Matthew W. McConnell singles out Raytheon Company (NYSE:RTN) as one of his two favorite Aerospace and Defense stocks going into earnings. Raytheon is the last defense prime with a pristine balance sheet levered at just 0.4x net debt/EBITDA, points out the analyst.
“We see upside to the 2018 bookings target, solid international demand, and margin upside at Integrated Defense Systems (IDS)” he cheers. Guidance is for $26.5-$27.0 billion of sales, $9.70-$9.90 of EPS, and $3.6-$4.0 billion of operating cash flow. However, McConnell is keeping his fingers crossed for a guidance boost. He cites better operating performance at “Integrated Defense Systems, which has had the strongest start to the year relative to our expectations.”
And this isn’t just a flash in the pan story. Far from it. McConnell’s upbeat conclusion suggests that the good times will keep rolling. He describes Raytheon as “one of the most favorably positioned defense primes based on its leading market positions in missile defense systems, missiles, and cyber which are seeing intense investment that we expect to continue for the foreseeable future.”
This bullish analysis comes with a $262 price target, indicating over 30% upside potential.
Top Earnings Stocks: Alphabet (GOOGL)
Internet king Alphabet Inc (NASDAQ:GOOGL) is out with its critical data in July 23. So far the sentiment is firmly upbeat. This makes sense given that GOOGL has averaged 23% growth for 33 straight quarters and shows no signs of slowing down any time soon.
Indeed, top Monness analyst Brian White has just reiterated his GOOGL Buy rating. This comes with a bullish $1,306 price target. “With sales up 19% per annum over the past four years, EPS turning in a 17% CAGR and a dominant position in search with a leadership in digital advertising, we believe Alphabet should trade at a healthy premium to the market and tech sector.”
White believes we are heading to another slam dunk quarter for the stock. He sees Alphabet exceeding the Street’s revenue projection of $32.26 billion. Furthermore, he sees ad revenue growth staying above 20% in Q2, along with continued strength in both mobile search and the programmatic business. He is modeling for 2Q:18 EPS of $9.89 vs the Street’s projected $9.61.
Like Facebook, Alphabet continues to trade at an unwarranted discount — and this means there is still plenty of time for investors to jump in. “With the stock up only 14% YTD compared to a 37% rise for the average stock in our coverage universe, we believe Alphabet can play catch up in H2:2018” White argues.
Top Earnings Stocks: VF Corp (VFC)
Last but not least we have V.F. Corporation (NYSE:VFC), a global leader in the world of apparel and footwear. VF Corp is the name behind multiple popular brands from Vans to The North Face, Lee and Eastpak. Not only is Vans experiencing a rapid popularity surge, but North Face is also showing strong momentum especially as VFC is now strategically managing supply levels.
Susquehanna’s Sam Poser is certainly feeling the hype right now. Ahead of the July 20 earnings report for 1Q19 he tells investors “Buy VFC. A beat-and-raise story is taking shape. We believe top-tier execution and strong momentum across brands will more than offset difficult revenue growth comparisons from 2H18.” Moreover “Prudent brand management and M&A synergies should be sources of upside to VFC’s current FY19 guidance.” Boom!
As for the earnings results specifically, he calls FY19 guidance “conservative” and expects a beat-and-raise story to take place as FY19 unfolds. Plus he believes that synergies from the Dickies acquisition are not fully baked into guidance. On this note he is forecasting revenue of $13.6B vs VFC’s guidance of $13.45B-$13.55B. Similarly he is modelling for EPS of $3.52, at the top end of VFC’s guidance.
TipRanks.com offers exclusive insights for investors by focusing on the moves of experts: Analysts, Insiders, Bloggers, Hedge Fund Managers and more. See what the experts are saying about your stocks now at TipRanks.com. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.
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