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5 Must-Buy Stocks Ahead of Earnings Results Next Week

·6 min read

The first-quarter 2022 earnings season is in full swing. Next week will be the biggest of the season, with more than 1,500 companies set to release their quarterly numbers. Market participants will closely monitor these earnings results and more importantly, the guidance issued by management.

Among the companies slated to report their quarterly numbers next week, we have selected five companies with a favorable Zacks Rank that are expected to beat earnings estimates. These are — The Mosaic Co. MOS, Nutrien Ltd. NTR, Westlake Corp. WLK, Host Hotels & Resorts Inc. HST and CDW Corp. CDW.

Q1 Earnings Results So Far

As of Apr 27, 177 S&P 500 companies reported earnings results. Year over year, the total earnings of these companies are up 1.1% on 11.4% higher revenues. Moreover, 80.8% of these companies beat earnings estimates and 72.9% beat revenue estimates. For the first quarter as a whole, total earnings of the S&P 500 Index are expected to be up 6.6% year over year on 11.1% higher revenues.

Our Top Picks

Five companies with a favorable Zacks Rank will report first-quarter earnings results next week. Each of these stocks carries a Zacks Rank #1 (Strong Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank 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 their earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The Mosaic is likely to gain from higher demand for fertilizers. Demand for phosphate and potash in North America was strong in 2021, and the momentum is likely to continue this year. Strong grower economics and crop commodity prices are driving potash demand globally.

The Vale Fertilizantes buyout is also expected to deliver significant synergies. Mosaic is also expected to benefit from its cost-reduction actions, leading to an improvement in its operating cost structure. MOS’ efforts to lower debt, streamline processes, centralize mining operations and automation are encouraging.

The Mosaic has an Earnings ESP of +0.88%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 8.2% over the last 30 days.

The Mosaic recorded earnings surprises in three of the last four reported quarters, with an average beat of 3.7%. The company is set to release earnings results on May 2, after the closing bell.

Nutrien is a leading integrated provider of crop inputs and services. NTR is expected to gain from higher demand for crop nutrients. Strong grower economics and higher crop prices are driving fertilizer demand globally. Demand for phosphate and potash is expected to remain strong this year.

Demand for nitrogen fertilizer also remains healthy in North America, Brazil and India. Higher selling prices for crop nutrients are also expected to drive Nutrien’s sales and margins. Acquisitions have also strengthened NTR’s foothold in the growing Brazilian agricultural market. Nutrien is also expected to benefit from its cost-reduction initiatives in the potash business.

NTR has an Earnings ESP of +0.55%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 1.4% over the last 30 days.

Nutrien recorded earnings surprises in three out of the last four reported quarters, with an average beat of 60.3%. NTR is set to release earnings results on May 2, after the closing bell.

Westlake Chemical is benefiting from synergies from the Axiall acquisition. The buyout has diversified its product portfolio and geographical operations. The NAKAN acquisition has also allowed WLK to boost its compounding business globally. Further, Westlake Chemical sees favorable demand trends for polyethylene and polyvinyl chloride resin.

Strong demand in the polyethylene business is likely to continue, especially in food packaging. Also, rising housing starts in the United States augur well for WLK’s downstream vinyl products business and domestic demand for PVC. Westlake Chemical should also benefit from its capacity expansion projects.

WLK has an Earnings ESP of +17.30%. It has an expected earnings growth rate of 17.6% for the current year. The Zacks Consensus Estimate for current-year earnings improved 7.8% over the last 30 days.

Westlake Chemical recorded earnings surprises in the last four reported quarters, with an average beat of 12.7%. WLK is set to release earnings results on May 3, before the opening bell.

Host Hotels & Resorts one of the leading lodging real estate investment trusts, engaged in the ownership, acquisition, and redevelopment of luxury and upper-upscale hotels in the United States and abroad. With a solid portfolio of luxury and upper-upscale hotels across lucrative markets, HST is likely to benefit from the relaxation of regulations, acceleration in vaccine distribution and improving supply-demand fundamentals.

Strategic acquisitions and value-enhancement initiatives are likely to aid long-term growth in Host Hotels & Resorts’ profitability. The capital-recycling program and a strong balance sheet augur well. Also, the recovery in the transient and group businesses and the continued strength in the leisure business are likely to help HST achieve an improvement in revenue per available room.

Host Hotels & Resorts has an Earnings ESP of +4.07%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 3% over the last 30 days.

HST recorded earnings surprises in the last four reported quarters, with an average beat of 107.7%. Host Hotels & Resorts is set to release earnings results on May 4, after the closing bell.

CDW is gaining from improved operating margin, lower interest expenses and a reduction in the effective tax rate. The ongoing digital transformation and higher demand for products that enable remote working and operations continuity amid the COVID-19 pandemic crisis are also boosting CDW’s growth.

CDW is also benefiting from growth in education and healthcare end markets. The acquisitions of Scalar Decisions and Aptris have strengthened CDW’s capabilities and expanded product offerings. Progress in network management and operating system software pose a tailwind.

CDW has an Earnings ESP of +0.16%. It has an expected earnings growth rate of 16.7% for the current year. CDW recorded earnings surprises in the last four reported quarters, with an average beat of 9.8%. CDW is set to release earnings results on May 4, before the opening bell.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Westlake Corp. (WLK) : Free Stock Analysis Report

Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report

The Mosaic Company (MOS) : Free Stock Analysis Report

CDW Corporation (CDW) : Free Stock Analysis Report

Nutrien Ltd. (NTR) : Free Stock Analysis Report

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