4 Top Stocks to Buy Ahead of Earnings Release
The second-quarter 2020 earnings season is here and yet-to-be reported results are bound to bear the marks of the pandemic, as evident from the ones reported. However, one may consider certain sectors that continued to perform well albeit the volatility that struck the markets.
The healthcare sector, for instance, put up a decent performance. In addition, social distancing measures and stay-at-home orders gave rise to a set of trends which influenced the economy in big ways. One may take a look at the sectors that gained because of these trends and invest in select stocks.
Demand for Healthcare Shoots Up
Healthcare products and services have witnessed an overwhelming demand since the onset of the coronavirus pandemic in the country earlier this year. Despite the market turbulence, healthcare stocks remained one of the decently gaining members of the broader S&P 500 index. Compared to the year-to-date rise of 0.7% of the S&P 500, the Health Care Select Sector SPDR Fund (XLV) has added 3.9%.
The increasing number of coronavirus cases in the country along with demand for digital healthcare consultation and services has in particular pushed the sector to the forefront. In addition, continued efforts by healthcare companies to come up with a potential vaccine for the highly infectious disease are also playing a crucial role in boosting the concerned stocks.
Emergence of New Trends Beneficial for Select Sectors
During the pandemic, certain new trends have emerged that are promising and could stay for a while. The first of these is the widespread adoption of online shopping for groceries and other essential products. The second one is the rise in demand for ready-to-eat and/or ready-to-cook meals, and inclination toward takeaways and pickups.
According to a surveyby Bricks Meet Clicks/Mercatus, online grocery sales rose 9% in June to an estimated $7.2 billion. The survey was conducted from Jun 24-25, and takes into account an estimated 45.6 million households that used delivery and pickup services for their grocery requirements last month.
The survey also reported that families placed about 1.9 orders per month, which was higher than an average of 1.7 orders in May. This increase in online orders was driven by more concerns about the infectious virus and greater online fulfilment capacity offered by retailers.
A major reason for this rapid and widespread use of online grocery delivery services was because more independent retailers began to offer online options for pickup and home delivery since June, along with retail giants expanding their online operations.
These aforementioned trends, thus, are clearly pushing consumer staples and select retail stocks higher.
4 Stocks to Buy
We have chosen four stocks from healthcare, consumer staples and retail sectors that could post promising earnings results later this week. Each of these stocks carries 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.
Quest Diagnostics Incorporated DGX is a provider of diagnostic testing, information and services. The company has an Earnings ESP of +181% and is set to release earnings results on Jul 23, before market open. Quest Diagnostics carries a Zacks Rank #1.
The Zacks Consensus Estimate for Quest Diagnostics’ current-year earnings has moved 41.7% north in the past 60 days. Quest Diagnostics, which belongs to the Zacks Medical - Outpatient and Home Healthcare industry, has an expected earnings growth rate of 19.4% for the next year.
Thermo Fisher Scientific Inc. TMO is a provider of analytical and other instruments, laboratory equipment, software, consumables, reagents, instrument systems, chemicals, supplies and services among others. The company has an Earnings ESP of +14.37% and is set to report results on Jul 22, before market open. Thermo Fisher Scientific carries a Zacks Rank #1.
The Zacks Consensus Estimate for Thermo Fisher Scientific’s current-year earnings has moved 6.8% north in the past 60 days. Thermo Fisher Scientific, which belongs to the Zacks Medical - Instruments industry, has an expected earnings growth rate of 13.2% for the next year.
The Boston Beer Company, Inc. SAM is a manufacturer and marketer of alcohol beverages. The company has an Earnings ESP of +20.46% and is set to release earnings results on Jul 23, after the closing bell. The Boston Beer Company carries a Zacks Rank #1.
The Zacks Consensus Estimate for The Boston Beer Company’s current-year earnings has moved 18.3% north in the past 60 days. The Boston Beer Company, which belongs to the Zacks Beverages - Alcohol industry, has an expected earnings growth rate of 37.6% for the next year.
Chipotle Mexican Grill, Inc. CMG operates Chipotle Mexican Grill restaurants. The company has an Earnings ESP of +423.64% and is set to release earnings results on Jul 22, after the closing bell. Chipotle Mexican Grill carries a Zacks Rank #2.
The Zacks Consensus Estimate for Chipotle Mexican Grill’s current-year earnings has moved 23.9% north in the past 60 days. Chipotle Mexican Grill, which belongs to the Zacks Retail - Restaurants industry, has an expected earnings growth rate of more than 100% for the next year.
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