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3 Stocks to Buy Ahead of Earnings

Benjamin Rains
Zacks.com featured highlights include: Lululemon, Sirius XM, Nutrisystem and Illumina

Stocks opened higher on Monday as investors seem to think the U.S.-led air strikes on Syria won’t lead to a much larger conflict. The strikes also coincided with the real start of first quarter earnings season, which investors should use as a way to fight off the volatility that has plagued markets recently.

Earnings season kicked into gear last Friday when banking giants, JPMorgan Chase JMP, Citigroup C, and PNC Financial PNC, reported their Q1 financial results. Going forward, investors should use this highly anticipated period to try to recoup any losses they might have suffered during the extended bearish run.

With that said, investors still need to be selective during earnings season and hunt for stocks that look poised to top quarterly earnings estimates. Conversely, investors should stay away from any companies that might disappoint by reporting lower-than-expected earnings results.

Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to surprise, in one way or the other.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Today, we are giving our readers a free look at three stocks that look ready to post an earnings beat this week.

Check them out now: 

1.     Honeywell International HON

Shares of Honeywell climbed on Monday, which might signal that investors have reason to be excited about the company famous for its thermostats and other control technologies for buildings, homes, and industries. Honeywell is indeed expected to see its revenues climb by 4.7% to reach $9.94 billion, based on our current Zacks Consensus Estimates. Meanwhile, the company’s earnings are projected to climb by 13.9% to $1.89 per share.

Honeywell is also currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of 0.46%. Diving a little deeper, HON’s Most Accurate Estimate—the representation of the most recent analyst sentiment—calls for earnings of $1.90 per share, which comes in 1 cent above our current consensus estimate. This means that Honeywell could be ready to top Q1 earnings estimates when it reports its financial results before the market opens on Friday, April 20.

2.       E-Trade Financial ETFC

Volatility might not be great for investors, but online brokerage firms such as E-Trade can benefit hugely. This has been reflected in E-Trade’s stock price, which is up 71% over the last year, and also managed to come out of the recent market downturn nearly unscathed. E-Trade is expected to see its first quarter revenues climb by 23.3% to reach $681.74 million. The company’s bottom line is projected to hit $0.78 per share, which would mark stellar 62.5% expansion from the year-ago period. 

Better still, E-Trade is currently a Zacks Rank #2 (Buy) and rocks an Earnings ESP of 1.14%, with its Most Accurate Estimate coming in 1 cent above our current consensus estimate. Therefore, investors should consider E-Trade a stock that looks poised to beat earnings estimates when it reports its Q1 financial results after market close on Thursday, April 19.

3.       Abbott Laboratories ABT

Shares of Abbott popped on Monday morning just a couple of days before the diversified healthcare company is set to report its first quarter earnings results. And it looks like Abbott investors have reason to be excited, with the company’s quarterly revenues projected to surge by more than 14% to hit $7.26 billion.

Meanwhile, Abbott’s earnings are expected to expand by 20.8% to reach $0.58 per share. The company is also currently a Zacks Rank #3 (Hold) and boasts an Earnings ESP of 0.75%. This means that investors might see Abbott top Q1 earnings estimates when the company reports its financial results before the opening bell on Wednesday, April 18.

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The PNC Financial Services Group, Inc (PNC) : Free Stock Analysis Report
 
Citigroup Inc. (C) : Free Stock Analysis Report
 
Abbott Laboratories (ABT) : Free Stock Analysis Report
 
Honeywell International Inc. (HON) : Free Stock Analysis Report
 
E*TRADE Financial Corporation (ETFC) : Free Stock Analysis Report
 
JMP Group LLC (JMP) : Free Stock Analysis Report
 
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