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Why Investors Need to Take Advantage of These 2 Computer and Technology Stocks Now
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.
Should You Consider Meta Platforms?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Meta Platforms (META - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $4.71 a share 30 days away from its upcoming earnings release on July 24, 2024.
META has an Earnings ESP figure of +0.97%, which, as explained above, is calculated by taking the percentage difference between the $4.71 Most Accurate Estimate and the Zacks Consensus Estimate of $4.66. Meta Platforms is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
META is part of a big group of Computer and Technology stocks that boast a positive ESP, and investors may want to take a look at Micron (MU - Free Report) as well.
Micron is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on June 26, 2024. MU's Most Accurate Estimate sits at $0.55 a share two days from its next earnings release.
The Zacks Consensus Estimate for Micron is $0.50, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +8.4%.
Because both stocks hold a positive Earnings ESP, META and MU could potentially post earnings beats in their next reports.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>
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Why Investors Need to Take Advantage of These 2 Computer and Technology Stocks Now
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.
Should You Consider Meta Platforms?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Meta Platforms (META - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $4.71 a share 30 days away from its upcoming earnings release on July 24, 2024.
META has an Earnings ESP figure of +0.97%, which, as explained above, is calculated by taking the percentage difference between the $4.71 Most Accurate Estimate and the Zacks Consensus Estimate of $4.66. Meta Platforms is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
META is part of a big group of Computer and Technology stocks that boast a positive ESP, and investors may want to take a look at Micron (MU - Free Report) as well.
Micron is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on June 26, 2024. MU's Most Accurate Estimate sits at $0.55 a share two days from its next earnings release.
The Zacks Consensus Estimate for Micron is $0.50, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +8.4%.
Because both stocks hold a positive Earnings ESP, META and MU could potentially post earnings beats in their next reports.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>