U.S. Markets open in 5 hrs 26 mins

5 Corporate Giants That Popped After Latest Earnings Release

Nalak Das

U.S. stocks are firing on all cylinders, with major stock indexes hitting fresh highs for a record number of times in 2019. At present, Wall Street seems unstoppable despite any concrete resolution to the more-than-a-year-old U.S.-China trade conflict.

Meanwhile, a few corporate behemoths that reported their last earnings results less than five weeks ago, popped after releasing earnings results. Fundamental robustness of those companies, strong growth potential and a broad-based Wall Street rally helped those stocks to move northward.

Near-Term Catalysts

A fundamentally stable U.S. economy, which is growing for the historically longest 11 years, albeit with some loss in pace and a dovish monetary stance adopted by the Fed in 2019 are the two major drivers of the Dow. The central bank cut the benchmark interest rate by 75 basis points in 2019. Furthermore, the government bond yield curve has steadied, eliminating fears of an impending recession.

U.S. consumer spending remained strong and the labor market remained firm with strong job addition and wage growth. Of late, some economic data have indicated a slow turnaround in U.S. manufacturing, which was hit hard due to the lingering tariff war with China. Last but not the least is the possibility of a trade deal with China this year that could be a major booster of market participants’ sentiment.

5 Corporate Giants Rally After Earnings Release

We have narrowed down our search to five large-cap stocks with market capital greater than $100 billion, which released their latest earnings results in less than five weeks ago. These stocks have soared in a short time span and still have upside left. Each of these stocks carries either a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The chart below shows price performance of five stocks in the past three months.

 

Microsoft Corp. MSFT is one of the largest broad-based technology providers in the world. Although software is the most-important revenue source, its offerings also include hardware and online services. Microsoft has a dominant position in the desktop PC market, with its operating systems being used in the majority of PCs worldwide.

Microsoft has doubled down on the cloud computing opportunity. Information and applications are increasingly stored, managed and protected in the cloud. Software providers are increasingly offering their tools as-a-service. This has opened the market to build a suitable cloud infrastructure, where Microsoft with its Azure platform is the second-largest player. Moreover, the company is one of the three largest providers of gaming hardware.

The Zacks Rank #2 company reported first-quarter fiscal 2020 earnings results on Oct 23, wherein it surpassed the Zacks Consensus Estimate for both the top and bottom lines. It has a projected earnings growth rate of 12.6% for the current year. The Zacks Consensus Estimate for the current year has improved 2.7% over the last 30 days. The stock price has surged 9.5% so far after the last earnings release.

Intel Corp. INTC is the world’s largest manufacturer of semiconductor products. It supplies to the computing and communications industries with microprocessors and system building blocks that are integral to computers and other connected devices, servers, and networking and communications products. Intel also offers associated hardware and software products, security products, and services.  

Intel’s data center business is doing very well. The drive to lower-cost computing devices is increasing the pressure on servers that are taking the load off these devices. Consequently, there is demand for a new breed of chips that are more efficient in terms of cost and energy. Intel has made advancements in this area and is now offering more integrated solutions that will likely be competitive on a cost per watt basis.

The Zacks Rank #2 company reported third-quarter 2019 earnings results on Oct 24, wherein it surpassed the Zacks Consensus Estimate for both the top and the bottom line. It has a projected earnings growth rate of 0.7% for the current year. The Zacks Consensus Estimate for the current year has improved 5.5% over the last 30 days. The stock price has jumped 12.3% so far after the last earnings release.

Apple Inc. AAPL designs, manufactures and sells iPhone, iPad, iPod, Apple TV, Mac personal computers, Apple Watch, HomePod and AirPods. These devices are powered by software applications including iOS, macOS, watchOS and tvOS operating systems.

Apple’s non-iPhone businesses, particularly Services and Wearables, are expected to drive top-line growth in fiscal 2020 and beyond. It currently has more than 420 million paid subscribers across its Services portfolio. The App Store continues to draw the attention of prominent developers from around the world, helping the company offer appealing new apps that drive App Store traffic. The company’s focus on autonomous vehicles and augmented reality/virtual reality (AR/VR) technologies presents growth opportunity in the long haul.

The Zacks Rank #3 company reported fourth-quarter fiscal 2019 earnings results on Oct 30, wherein it surpassed the Zacks Consensus Estimate for both the top and bottom lines. It has a projected earnings growth rate of 10.8% for the current year. The Zacks Consensus Estimate for the current year has improved 1.3% over the last 30 days. The stock price has surged 9.8% so far after the last earnings release.

UnitedHealth Group Inc. UNH is a diversified health and well-being company. It leverages core competencies in advanced technology-based transactional capabilities, health care data, knowledge and information, and health care resource organization and care facilitation. It operates through two segments: UnitedHealthcare and Optum.

UnitedHealth’s health service business is becoming increasingly valuable. It is also crucial to the company’s diversification strategy. The primary growth drivers for Optum are pharmacy care services, care delivery, technology, government services, and international. UnitedHealth’s membership in the public and senior business has been growing consistently over the years. Going forward, Medicare business should fuel membership growth.

The Zacks Rank #3 company reported third-quarter 2019 earnings results on Oct 15, wherein it surpassed the Zacks Consensus Estimate for both the top and bottom lines. It has a projected earnings growth rate of 16.2% for the current year. The Zacks Consensus Estimate for the current year has improved 0.1% over the last 30 days. The stock price has jumped 14.9% so far after the last earnings release.

AbbVie Inc. ABBV is a biopharmaceutical company, focused on the development and marketing of treatments for complex and serious ailments. The company has a presence in the rheumatoid arthritis, cancer, psoriasis, Crohn’s disease, HIV, hepatitis C virus (HCV), thyroid disease, Parkinson’s disease, ulcerative colitis, endometriosis and cystic fibrosis markets.

AbbVie has a deep pipeline consisting of several interesting late-stage candidates. Key recent FDA approvals include that of Orilissa (elagolix) for management of pain associated with endometriosis, a common gynecologic disorder in July 2018, Skyrizi (risankizumab) for plaque psoriasis in April 2019 and Rinvoq (upadacitinib) for moderate-to-severe rheumatoid arthritis (RA) in August 2019.

The Zacks Rank #3 company reported third-quarter 2019 earnings results on Nov 1, wherein it surpassed the Zacks Consensus Estimate for both the top and bottom lines. It has a projected earnings growth rate of 12.9% for the current year. The Zacks Consensus Estimate for the current year has improved 0.2% over the last 30 days. The stock price has climbed 8.9% so far after the last earnings release.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>