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Buy These 3 Stocks With Strong Upside Left Ahead of Earnings
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We are in the middle of the second-quarter 2024 earnings period. So far, results exceeded expectations. As of Jul 31, 285 companies of the S&P 500 Index — popularly known as Wall Street’s broad-market index — reported their quarterly financial numbers.
Total earnings for these index members increased 9.8% from the same period last year on 4.8% higher revenues, with 80.7% beating EPS estimates and 59.6% beating revenue estimates. At present, total earnings of the S&P 500 Index in the second quarter are expected to be up 9% on 5.3% higher revenues. If this expectation materializes, it will be the highest earnings growth pace since the 10% earnings growth in the first quarter of 2022.
This week, market participants are busy analyzing the earnings results of big techs. Aside from these big techs or the “magnificent 7” companies, several companies with a favorable Zacks Rank will report this week and the next. Some of these companies with possible earnings beat represent strong price appreciations.
Our Top Picks
We have narrowed our search to five such stocks that are poised to beat on earnings results with solid upside left. Each of these stocks carries either a Zacks Rank # 1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Twilio Inc.’s (TWLO - Free Report) second-quarter results are likely to reflect gains from sustained digital transformation efforts as enterprises continue to reconfigure their setup for a hybrid operational environment. TWLO’s initiatives in expanding the network with independent software vendors and its global partners are likely to have favored the second-quarter performance.
The enhancement of Twilio’s Segment and Flex platforms with new products like Agent Colpilot, Linked Audiences and the Segment Data Graph is likely to have attracted more customers in the quarter.
Solutions like Twilio Conversations, SendGrid Ads and SendGrid’s Email Validation application programming interface are also likely to have contributed to the company’s performance. Moreover, Twilio’s integration of artificial intelligence in several communication and segment products is also likely to act in favor.
Another key driver is expected to have been TWLO’s growing scope among global enterprises. Moreover, TWLO’s bottom line is likely to benefit from its cost-saving initiatives, which include workforce reduction and the closure of several offices.
Twilio has an expected revenue and earnings growth rate of 4.6% and 27.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 30 days. The company reported positive earnings surprises in the last four reported quarters with an average beat of 59%.
Zacks Rank #1 Twilio will report on Aug 1, after the closing bell. For second-quarter 2024, TWLO has an Earnings ESP of +2.34%. The average price target of brokerage firms represents an increase of 18.6% from the last closing price of $59.13. The brokerage target price is currently in the range of $55-$110.
Image Source: Zacks Investment Research
Shopify Inc. (SHOP - Free Report) is benefiting from strong growth in its merchant base. New merchant-friendly tools like Bill Pay, Tax Platform, Collective and the Marketplace Connect app are helping it to win new merchants. The strong adoption of these solutions holds promise for SHOP’s prospects.
Integration of Shop Pay Installments into the point-of-sale terminal and general availability of Pro makes SHOP easier for merchants to discover and engage their customers. The expansion of back-office merchant solutions to more countries is also strengthening SHOP’s international footprint. An expanding partner base that includes TikTok, Snap, Pinterest, Criteo, IBM, Cognizant, Amazon and Adyen is expected to expand its merchant base further.
Shopify has an expected revenue and earnings growth rate of 20.7% and 33.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 12.5% over the last 90 days. The company reported positive earnings surprises in the last four reported quarters with an average beat of 57%.
Zacks Rank #2 Shopify will report on Aug 7, before the opening bell. For second-quarter 2024, SHOP has an Earnings ESP of +7.78%. The average price target of brokerage firms represents an increase of 30% from the last closing price of $61.20. The brokerage target price is currently in the range of $63-$100.
Image Source: Zacks Investment Research
Take-Two Interactive Software Inc.’s (TTWO - Free Report) top line is likely to benefit from strong digital revenues, driven by the solid demand for well-known game franchises like GTA, Red Dead Redemption and NBA. TTWO expects this trend to continue in the future.
The acquisition of Zynga has established Take-Two Interactive Software as one of the largest publishers of mobile games. The deal unified TTWO’s top-class portfolio of PC and console games and Zynga’s leading mobile franchises. TTWO continues to invest heavily in product development, which is likely to boost its long-term prospects.
The company has an expected revenue and earnings growth rate of 5.5% and 1.2%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last seven days. The company reported positive earnings surprises in two out of the last four reported quarters with an average beat of 89.8%.
Zacks Rank #1 Take-Two Interactive Software will report on Aug 8, after the closing bell. For first-quarter fiscal 2025, TTWO has an Earnings ESP of +118.18%. The average price target of brokerage firms represents an increase of 18.7% from the last closing price of $150.53. The brokerage target price is currently in the range of $120-$200.
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Buy These 3 Stocks With Strong Upside Left Ahead of Earnings
We are in the middle of the second-quarter 2024 earnings period. So far, results exceeded expectations. As of Jul 31, 285 companies of the S&P 500 Index — popularly known as Wall Street’s broad-market index — reported their quarterly financial numbers.
Total earnings for these index members increased 9.8% from the same period last year on 4.8% higher revenues, with 80.7% beating EPS estimates and 59.6% beating revenue estimates. At present, total earnings of the S&P 500 Index in the second quarter are expected to be up 9% on 5.3% higher revenues. If this expectation materializes, it will be the highest earnings growth pace since the 10% earnings growth in the first quarter of 2022.
This week, market participants are busy analyzing the earnings results of big techs. Aside from these big techs or the “magnificent 7” companies, several companies with a favorable Zacks Rank will report this week and the next. Some of these companies with possible earnings beat represent strong price appreciations.
Our Top Picks
We have narrowed our search to five such stocks that are poised to beat on earnings results with solid upside left. Each of these stocks carries either a Zacks Rank # 1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Twilio Inc.’s (TWLO - Free Report) second-quarter results are likely to reflect gains from sustained digital transformation efforts as enterprises continue to reconfigure their setup for a hybrid operational environment. TWLO’s initiatives in expanding the network with independent software vendors and its global partners are likely to have favored the second-quarter performance.
The enhancement of Twilio’s Segment and Flex platforms with new products like Agent Colpilot, Linked Audiences and the Segment Data Graph is likely to have attracted more customers in the quarter.
Solutions like Twilio Conversations, SendGrid Ads and SendGrid’s Email Validation application programming interface are also likely to have contributed to the company’s performance. Moreover, Twilio’s integration of artificial intelligence in several communication and segment products is also likely to act in favor.
Another key driver is expected to have been TWLO’s growing scope among global enterprises. Moreover, TWLO’s bottom line is likely to benefit from its cost-saving initiatives, which include workforce reduction and the closure of several offices.
Twilio has an expected revenue and earnings growth rate of 4.6% and 27.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 30 days. The company reported positive earnings surprises in the last four reported quarters with an average beat of 59%.
Zacks Rank #1 Twilio will report on Aug 1, after the closing bell. For second-quarter 2024, TWLO has an Earnings ESP of +2.34%. The average price target of brokerage firms represents an increase of 18.6% from the last closing price of $59.13. The brokerage target price is currently in the range of $55-$110.
Image Source: Zacks Investment Research
Shopify Inc. (SHOP - Free Report) is benefiting from strong growth in its merchant base. New merchant-friendly tools like Bill Pay, Tax Platform, Collective and the Marketplace Connect app are helping it to win new merchants. The strong adoption of these solutions holds promise for SHOP’s prospects.
Integration of Shop Pay Installments into the point-of-sale terminal and general availability of Pro makes SHOP easier for merchants to discover and engage their customers. The expansion of back-office merchant solutions to more countries is also strengthening SHOP’s international footprint. An expanding partner base that includes TikTok, Snap, Pinterest, Criteo, IBM, Cognizant, Amazon and Adyen is expected to expand its merchant base further.
Shopify has an expected revenue and earnings growth rate of 20.7% and 33.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 12.5% over the last 90 days. The company reported positive earnings surprises in the last four reported quarters with an average beat of 57%.
Zacks Rank #2 Shopify will report on Aug 7, before the opening bell. For second-quarter 2024, SHOP has an Earnings ESP of +7.78%. The average price target of brokerage firms represents an increase of 30% from the last closing price of $61.20. The brokerage target price is currently in the range of $63-$100.
Image Source: Zacks Investment Research
Take-Two Interactive Software Inc.’s (TTWO - Free Report) top line is likely to benefit from strong digital revenues, driven by the solid demand for well-known game franchises like GTA, Red Dead Redemption and NBA. TTWO expects this trend to continue in the future.
The acquisition of Zynga has established Take-Two Interactive Software as one of the largest publishers of mobile games. The deal unified TTWO’s top-class portfolio of PC and console games and Zynga’s leading mobile franchises. TTWO continues to invest heavily in product development, which is likely to boost its long-term prospects.
The company has an expected revenue and earnings growth rate of 5.5% and 1.2%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last seven days. The company reported positive earnings surprises in two out of the last four reported quarters with an average beat of 89.8%.
Zacks Rank #1 Take-Two Interactive Software will report on Aug 8, after the closing bell. For first-quarter fiscal 2025, TTWO has an Earnings ESP of +118.18%. The average price target of brokerage firms represents an increase of 18.7% from the last closing price of $150.53. The brokerage target price is currently in the range of $120-$200.
Image Source: Zacks Investment Research