Ride the Q1 Earnings Wave: 3 Stocks to Buy for Post-Report Riches


  • Ride the Q1 earnings wave: three stocks to buy after earnings.
  • Chipotle Mexican Grill (CMG): The Mexican restaurant chain crushed its Q1 results, sending its stock higher.
  • Spotify (SPOT): The audio streamer’s stock jumped 10% on news of its Q1 earnings and outlook. 
  • Colgate-Palmolive (CL): The consumer goods company’s latest print benefitted from pricing power.  
stocks to buy after earnings - Ride the Q1 Earnings Wave: 3 Stocks to Buy for Post-Report Riches

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The first-quarter earnings train is running at full steam now with company results coming at us fast and furiously. FactSet reports that with 46% of companies listed on the benchmark S&P 500 index having reported financial results, 77% have beaten expectations for their earnings, while 60% have announced better-than-expected revenue. The year-over-year earnings growth rate for Q1 among S&P 500-listed companies is 3.5%, marking the third-straight quarter of year-over-year growth for the benchmark.

While all that sounds good, the reality is that the fortunes of many companies have risen or fallen based on their Q1 prints. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) announces its first dividend and its stock jumps 10% in a day. Meta Platforms (NASDAQ:META) offers weak guidance and Mark Zuckerberg’s net worth drops by $18 billion. Ride the Q1 earnings wave: three stocks to buy for post-report riches.

Chipotle Mexican Grill (CMG)

Chipotle - Sign on building, CMG stock
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Chipotle Mexican Grill (NYSE:CMG) does it again. The restaurant chain that specializes in Mexican cuisine posted strong first-quarter financial results and issued bullish guidance that beat Wall Street forecasts, sending its stock higher. For Q1, Chipotle announced earnings per share (EPS) of $13.37 compared to $11.68 that was the consensus forecast of analysts. Revenue amounted to $2.70 billion versus $2.68 billion expected. Sales rose 14% from a year earlier.

Chipotle also noted that its same-store sales rose 7%, beating estimates of 5.2% growth. The company has managed to report increased customer traffic despite higher menu prices. The company raised prices across its network last October due to inflation. Chipotle has also been focusing on making its food items more quickly, improving the industry metric known as “throughput.” In Q1, Chipotle’s throughput reached its highest level in four years. The restaurant chain added 47 new locations during the quarter.

As Chipotle continues to fire on all cylinders, the company is currently undertaking a 50-for-1 stock split, one of the largest in the history of the New York Stock Exchange. The stock is expected to start trading on a split adjusted basis on June 26 of this year. In the meantime, CMG stock has risen 60% in the last 12 months, including a 42% gain this year.

Spotify (SPOT)

Close up view of a smartphone with Spotify (SPOT) logo on display. Laptop and headphone on background. New technology, social media, network, liquid music concept.
Source: Fabio Principe / Shutterstock.com

Another stock to buy after earnings reports is Spotify Technology (NYSE:SPOT). The audio streaming service saw its stock rise nearly 10% after beating Wall Street forecasts with its Q1 profit. Swedish based Spotify reported a net profit of 197 million euros ($210 million U.S.), equivalent to 97-euro cents per share. That result was much better than the 62-euro cents a share expected among analysts. Revenue in Q1 rose 20% to €3.64 billion, beating forecasts of €3.61 billion.

Spotify CEO Daniel Ek has called 2024 a “year of monetization” at the company known for its music and podcast streaming platform. The company has raised prices on individual streaming plans in the U.S. for the first time since 2011 and cut 17% of its workforce, equal to about 1,500 employees. Monthly active users on Spotify rose to 615 million in Q1, up 19% compared with the same period a year earlier. Premium subscriptions on the platform rose 14% to 239 million during the January through March period.

SPOT stock has increased 116% in the last 12 months, including a 52% year-to-date gain.

Colgate-Palmolive (CL)

Colgate toothpaste and mouthwash in a cup with a toothbrush
Source: monticello / Shutterstock.com

Shares of Colgate-Palmolive (NYSE:CL) got a 2% bump after its Q1 earnings print, bringing the year-to-date gain in CL stock to 13%. The consumer goods company known for products such as Colgate toothpaste, Speed Stick deodorant, and Irish Spring soap reported EPS of 86 cents, which topped Wall Street estimates of 81 cents. The company announced Q1 revenue of $5.07 billion, which also beat analysts’ consensus forecasts of $4.96 billion.

Colgate-Palmolive attributed the earnings beat to increased prices and continued spending on the part of consumers. Owing to the essential nature of many of its hygiene products, Colgate has proven to have “pricing power,” or the ability to raise prices without losing customers. Colgate-Palmolive said it now expects revenue growth of 2% to 5% this year, up from a previous forecast of 1% to 4%. In the last 12 months, CL stock has increased nearly 20%.

On the date of publication, Joel Baglole held a long position in GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

Article printed from InvestorPlace Media, https://investorplace.com/2024/04/ride-the-q1-earnings-wave-3-stocks-to-buy-for-post-report-riches/.

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