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5 Consumer Discretionary Stocks to Buy Before Earnings Results

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·6 min read
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  • ^GSPC
  • ATGE
  • SNA
  • SKX
  • VSTO
  • NWSA

Fourth-quarter 2020 earnings are in full swing and market participants are watching the results closely as the last quarter was a mixed one both in terms of economic data and stock market performance. Corporate profits in the fourth quarter and their guidance will be thoroughly scrutinized by financial experts and economists to gauge whether the U.S. economy will return to the pre-pandemic level in the first quarter of 2021.

Meanwhile, five Consumer Discretionary stocks with a favorable Zacks Rank are set to beat on earnings results this week. Investment in these stocks should provide good returns to investors going forward.

Consumer Discretionary Sector At Q4

The consumer discretionary sector comprises businesses that sell goods and services, which are considered non-essential by consumers. These are the products that consumers can avoid without any major consequences to their well-being. In fact, these goods are desirable only if the available income of an individual is sufficient to purchase them.

The momentum of U.S. economic recovery slowed down in fourth quarter 2020. The resurgence of coronavirus in several states had forced local governments to re-impose partial lockdown and restrict daily economic activities even during the holiday season. Moreover, the lack of a fresh round of fiscal stimulus owing to disagreement in the U.S. Congress dented consumers' confidence.

The fourth-quarter GDP grew at a 4% annual rate compared with the previous quarter in which the GDP grew at a 33.4% annual rate. The consensus estimate was 4.4%. Measured from the fourth quarter of 2020 to the fourth quarter of the previous year, the GDP declined 2.5%.

Despite facing tough economic conditions, the Consumer Discretionary Select Sector SPDR (XLY), one of the 11 broad sectors of the market's benchmark the S&P 500 Index, rallied 9.6% in the last quarter. In October, the XLY dropped 2.7% while in the last two months of 2020, the XLY jumped 9.7% and 2.4%, respectively.

Our Top Picks

We have narrowed down our search to five consumer discretionary stocks slated to release earnings results this week. Each of these stocks carries either a Zacks Rank # 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) 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 the earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The chart below shows the price performance of our five picks in the last quarter.

Adtalem Global Education Inc. ATGE provides a wide array of educational services across medical and healthcare, financial services and business and law worldwide. It operates through two segments, Medical and Healthcare and Financial Services. The company has an Earnings ESP of +1.47% for the second quarter of fiscal 2021 (ended December 2020).

Adtalem Global has an expected earnings growth rate of 28.1% for the current year (ending June 2021). The Zacks Consensus Estimate for current-year earnings has improved 1% over the last 30 days. It has a trailing four-quarter earnings surprise of 34.1%, on average. The company is set to release earnings results on Feb 2, after the closing bell.

Snap-on Inc. SNA manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users worldwide. It operates through Commercial & Industrial Group, Snap-on Tools Group, Repair Systems & Information Group, and Financial Services segments. The company has an Earnings ESP of +1.21% for fourth-quarter 2020.

Snap-on has an expected earnings growth rate of 7.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days. It has a trailing four-quarter earnings surprise of 11.3%, on average. The company is set to release earnings results on Feb 4, before the opening bell.

Vista Outdoor Inc. VSTO designs, manufactures and markets consumer products for outdoor sports and recreation markets in the United States and internationally. It operates in two segments: Shooting Sports and Outdoor Products. The company has an Earnings ESP of +5.39% for the third quarter of fiscal 2021 (ended December 2020).

Vista Outdoor has an expected earnings growth rate of more than 100% for the current year (ending March 2021). The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 30 days. It has a trailing four-quarter earnings surprise of 63.5%, on average. The company is set to release earnings results on Feb 4, before the opening bell.

News Corp. NWSA a media and information services company that creates and distributes content for consumers and businesses worldwide. It operates in six segments: Digital Real Estate Services, Subscription Video Services, Dow Jones, Book Publishing, News Media, and Other. The company has an Earnings ESP of +5.88% for the second quarter of fiscal 2021 (ended December 2020).

News Corp. has an expected earnings growth rate of 13.6% for the current year (ending June 2021). The Zacks Consensus Estimate for current-year earnings has improved 8.7% over the last 7 days. It has a trailing four-quarter earnings surprise of 63.8%, on average. The company is set to release earnings results on Feb 4, after the closing bell.

Skechers U.S.A. Inc. SKX designs, develops, markets, and distributes footwear for men, women, and children; and performance footwear for men and women under the Skechers GO brand worldwide. It operates through three segments: Domestic Wholesale Sales, International Wholesale Sales, and Retail Sales. The company has an Earnings ESP of +1.50% for fourth-quarter 2020.

Skechers U.S.A. has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 7 days. It has a trailing four-quarter earnings surprise of 22.1%, on average. The company is set to release earnings results on Feb 4, after the closing bell.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>


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SnapOn Incorporated (SNA) : Free Stock Analysis Report

Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report

News Corporation (NWSA) : Free Stock Analysis Report

Adtalem Global Education Inc. (ATGE) : Free Stock Analysis Report

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