Earnings Will Drive Stocks Higher

Earnings Will Drive Stocks Higher

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Thank you to those of you who joined me earlier this afternoon at the Big Energy Bet event! It was great to have you there. We certainly had a lot to cover, including why certain small-cap stocks within the energy sector could begin skyrocketing by 10x or more. I also revealed my No. 1 energy stock recommendation, absolutely free.

If you missed it, you can view the rebroadcast here.


It’s easy to be negative after a rough 12 months for the stock market. All the major indices ended the year substantially lower than where they started the year – and we weren’t spared in the market volatility.

But as always, I encourage you to tune out the fear-mongering media and stay positive.

Earnings season kicks off in earnest next week, with the big banks first to report. And we already are seeing evidence that earnings are working…

Case in point: Lamb Weston Holdings (LW).

Prior to the opening bell today, Lamb Weston released better-than-expected results for its second quarter in fiscal year 2023, and in turn, the company upped its outlook for full-year 2023. During the second quarter, sales increased 27% year-over-year to $1.28 billion, and adjusted earnings soared 171% year-over-year to $185.4 million, or $1.28 per share. The consensus estimate called for earnings of $0.74 per share on $1.15 billion in sales, so Lamb Weston crushed earnings estimates by 73% and posted an 11.3% sales surprise.

For the first six months of the fiscal year, Lamb Weston noted that sales grew 21% year-over-year to $2.4 billion and adjusted earnings surged 219% year-over-year to $2.04 per share.

Lamb Weston now expects full-year 2023 sales between $4.8 billion and $4.9 billion and adjusted earnings per share between $3.75 and $4.00. That compares to total sales of $4.01 billion and adjusted earnings of $2.08 per share in fiscal year 2022.

LW shares surged more than 9% to a new 52-week high today in the wake of the strong report and positive earnings and sales guidance for 2023.

Clearly, when earnings work, they dropkick stocks and send them higher.

So, in today’s Market 360, we’ll talk about what to expect as we head into earnings season… and why one sector is  poised to have a stellar performance this earnings season.

But we can’t ignore the elephant in the room: The December Federal Open Market Committee (FOMC) minutes that were just released yesterday. Fed action – and projections – will also determine the near-term direction of stocks. So, let’s briefly review the FOMC minutes first.

Inflation and the Fed

Yesterday, the minutes from December’s FOMC meeting were released.

As you may recall, last month the Fed raised key interest rates by 50 basis points, compared to the 75-basis-point rate hikes we experienced during the previous four meetings. Fed officials also raised their inflation expectations with the medium Personal Consumption Expenditures (PCE) projection at 3.1% at the end of 2023, compared to the 2.8% that was projected in September.

Bottom line: The minutes revealed that Fed officials agreed that inflation remains “unacceptably high.”

The next FOMC meeting will be on Feb. 1. and the FOMC statement will be much more important than any key interest rate increase.  The fact is, the Fed is much more in line with market rates, so future interest rate increases should be minimal and their next FOMC statement should signal that they are nearing the end of any key interest rate cycle.

And when the Fed pivots, that will be good news for stocks.

In the meantime, it’s important we remain focused on fundamentally superior stocks that will outperform in the current market conditions. In this case, energy stocks.

My Favorite Time of Year

It’s no secret, earnings season is my favorite time of year. It’s when we get to separate the weak from the herd – and when investing in fundamentally superior companies truly pays off.

What this means is that we have to remain laser-focused on companies with superior fundamentals in order to be successful. And, right now, that’s in the energy sector.

Consider this: FactSet currently estimates that the S&P 500 will report an earnings decline of 2.8% in the fourth quarter, while the energy sector is still expected to post earnings growth of 64.4%. Without energy, the S&P 500’s earnings decline would be even bigger, at a 7.3% drop.

That’s great news for energy stocks.

Outside of energy, there are no sectors in the S&P 500 that are forecasted to post positive earnings growth, so it is slim pickings out there when looking for stocks with strong sales and earnings.

During today’s Big Energy Bet event, I went into further detail as to why I’m so certain the energy sector should be the dominant force over the long term for the U.S. economy – and even the entire world.

Plus, I shared the best opportunities in this space – including a free stock pick – ticker symbol and all.

If you missed this afternoon’s event, it’s not too late. Simply click here for the rebroadcast.


Source: InvestorPlace unless otherwise noted


Louis Navellier

P.S. Tomorrow, I’m releasing the January Breakthrough Stocks Monthly Issue, with even more details on why I’m so bullish on the energy sector. I’ll also reveal a new buy recommendation and my latest Top 5 Stocks list.

To learn more about Breakthrough Stocks – and access the January Monthly Issue as soon as it’s released tomorrow – click here.

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Lamb Weston Holdings (LW)

Louis Navellier, who has been called “one of the most important money managers of our time,” has broken the silence in this shocking “tell all” video… exposing one of the most shocking events in our country’s history… and the one move every American needs to make today.

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