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NVIDIA & 2 Other S&P 500 Stocks Show Strong Earnings Growth
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While market participants see the S&P 500 at 6,000 by the year-end, a lot depends on how the stocks perform in the third-quarter earnings season. This is because earnings are the most vital variable influencing the share price.
For the third quarter, total earnings for the S&P 500 companies are projected to improve 3.4% from a year ago on 4.5% higher revenues. Hence, it is important to keep an eye on stocks such as NVIDIA Corporation (NVDA - Free Report) , Boston Scientific Corporation (BSX - Free Report) and American Water Works Company, Inc. (AWK - Free Report) listed on the S&P 500 index, which are currently exhibiting superb earnings growth.
Earnings Estimates & Share Price Movements
Frequently, we have seen a decline in the stock price despite earnings growth and a rally in price following an earnings decline. This is largely the result of a company’s earnings failing to meet market expectations.
Earnings estimates embody analysts’ opinions on factors such as sales growth, product demand, competitive industry environment, profit margins, and cost control. Thus, earnings estimates serve as a valuable tool, while making investment decisions. Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.
Thus, investors should watch for stocks set to surge. Investors need to buy stocks with historical earnings growth and witnessing a rise in quarterly and annual earnings estimates.
We use that basis to determine our stock selections using Zack’s Research Wizard Tool.
Screening Measures Using Research Wizard:
To shortlist stocks that have striking earnings growth and positive estimate revisions, we have added the following parameters:
Zacks Rank less than or equal to 3 (Only Zacks’ ‘Strong Buys’, ‘Buys’, and ‘Holds’ are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.)
5-Year Historical EPS Growth (%) greater than X-Industry (stocks with a strong EPS growth history).
% Change EPS F(0)/F(-1) greater than or equal to 5 (companies that saw year-over-year earnings growth of 5% or more in the last reported fiscal).
% Change Q1 Estimates over the last 4 weeks greater than zero (stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks).
% Change F1 Estimates over the last 1 week greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 1 week).
% Change F1 Estimates over the last 4 weeks greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 4 weeks).
The above criteria narrowed the universe of around 7,839 stocks to only 12. Here are the top three stocks:
NVIDIA
NVIDIA is the global leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. NVDA’s expected earnings growth rate for the current year is 116.2%. NVDA currently has a Zacks Rank #3 (Hold) (read more: Post-Fed Rate Cut: Buy, Hold, or Sell NVIDIA Stock?).
Boston Scientific
Boston Scientific manufactures medical devices and products used in various interventional medical specialties worldwide. BSX’s expected earnings growth rate for the current year is 17.1%. BSX currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Water Works
American Water Works is a water supply and wastewater service provider. AWK’s expected earnings growth rate for the current year is 7.6%. AWK currently has a Zacks Rank #2.
You can sign up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors, and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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NVIDIA & 2 Other S&P 500 Stocks Show Strong Earnings Growth
While market participants see the S&P 500 at 6,000 by the year-end, a lot depends on how the stocks perform in the third-quarter earnings season. This is because earnings are the most vital variable influencing the share price.
For the third quarter, total earnings for the S&P 500 companies are projected to improve 3.4% from a year ago on 4.5% higher revenues. Hence, it is important to keep an eye on stocks such as NVIDIA Corporation (NVDA - Free Report) , Boston Scientific Corporation (BSX - Free Report) and American Water Works Company, Inc. (AWK - Free Report) listed on the S&P 500 index, which are currently exhibiting superb earnings growth.
Earnings Estimates & Share Price Movements
Frequently, we have seen a decline in the stock price despite earnings growth and a rally in price following an earnings decline. This is largely the result of a company’s earnings failing to meet market expectations.
Earnings estimates embody analysts’ opinions on factors such as sales growth, product demand, competitive industry environment, profit margins, and cost control. Thus, earnings estimates serve as a valuable tool, while making investment decisions. Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.
Thus, investors should watch for stocks set to surge. Investors need to buy stocks with historical earnings growth and witnessing a rise in quarterly and annual earnings estimates.
We use that basis to determine our stock selections using Zack’s Research Wizard Tool.
Screening Measures Using Research Wizard:
To shortlist stocks that have striking earnings growth and positive estimate revisions, we have added the following parameters:
Zacks Rank less than or equal to 3 (Only Zacks’ ‘Strong Buys’, ‘Buys’, and ‘Holds’ are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.)
5-Year Historical EPS Growth (%) greater than X-Industry (stocks with a strong EPS growth history).
% Change EPS F(0)/F(-1) greater than or equal to 5 (companies that saw year-over-year earnings growth of 5% or more in the last reported fiscal).
% Change Q1 Estimates over the last 4 weeks greater than zero (stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks).
% Change F1 Estimates over the last 1 week greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 1 week).
% Change F1 Estimates over the last 4 weeks greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 4 weeks).
The above criteria narrowed the universe of around 7,839 stocks to only 12. Here are the top three stocks:
NVIDIA
NVIDIA is the global leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. NVDA’s expected earnings growth rate for the current year is 116.2%. NVDA currently has a Zacks Rank #3 (Hold) (read more: Post-Fed Rate Cut: Buy, Hold, or Sell NVIDIA Stock?).
Boston Scientific
Boston Scientific manufactures medical devices and products used in various interventional medical specialties worldwide. BSX’s expected earnings growth rate for the current year is 17.1%. BSX currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Water Works
American Water Works is a water supply and wastewater service provider. AWK’s expected earnings growth rate for the current year is 7.6%. AWK currently has a Zacks Rank #2.
You can sign up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
Disclosure: Officers, directors, and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.