5 Stocks to Navigate the Coronavirus Earnings Season
(0:20) - Upcoming Earnings Season: How Bad Is It?
(4:00) - What Should You Be Watching During This Earnings Season?
(7:25) - Is The Tech Sector The Place To Invest Right Now?
(13:15) - Who Stands To Be Hurt The Most?
(18:30) - What Should You Be Listneing For During Earnings Calls
(25:20) - Episode Roundup: MSFT, AMZN, WMT, TDOC, AMN, ACN, PXD, CVX
Podcast@Zacks.com
Welcome to Episode #221 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is joined by Sheraz Mian, Zacks Director of Research, to discuss what the outlook is for the first quarter earnings season and the rest of the year.
Current Zacks data now projects S&P 500 first quarter earnings to fall 11.8%, but that will change daily as more earnings reports roll in.
The second quarter is now expected to decline 19.7%.
The full year 2020 Zacks Consensus is also on the decline, now falling 10.5% after falling just 4.4% by Apr 1. The analysts are getting more aggressive with their second quarter earnings cuts now.
Where Should Investors Be Looking for Safety?
Big caps, especially in technology and in supermarkets and food, have been holding up well in the coronavirus crisis and have the balance sheets to weather the storm in 2020.
That means companies like Microsoft MSFT and Walmart WMT should continue to perform well.
Neither stock is much of a “deal” here though.
Microsoft trades with a forward P/E of 29 and Walmart with a forward P/E of 24.
Where Are the Deals?
Energy is expected to see the largest second quarter earnings decline, with the consensus showing a decline of 100%.
Even with crude still at depressed levels, production is now being cut globally.
Should investors be looking at some of the “best” names in the space?
One of the energy companies to consider is Chevron CVX with its diverse business model, including refining.
However, currently, it’s a Zacks Rank #5 (Strong Sell) because analysts have been cutting 2020 earnings estimates.
They now expect Chevron to lose $0.24 versus its 2019 earnings of $6.27.
Shares are still down 29% year-to-date.
Are Medical Services the Place to Invest?
Business services, including medical services, are expected to be one of the sectors that may have earnings growth in the second quarter.
Two companies to watch are:
1. Teladoc Health Inc. TDOC, which is up 91.8% year-to-date already, is not exactly a hidden gem. It’s not expected to have positive earnings this year, but it’s a Zacks Rank #2 (Buy) as demand for telehealth services has soared during the coronavirus.
2. AMN Healthcare Services AMN which provides healthcare workplace solutions and staffing, including doctors and nurses. Shares spiked in March and were up 30% year-to-date, but have since come back down to earth and are up just 2.7% year to date. It trades with a forward P/E of 17.5.
What else do you need to know about how to navigate this coronavirus-impacted earnings season?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of MSFT and AMZN, mentioned on the podcast, in her personal portfolio.]
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Microsoft Corporation (MSFT) : Free Stock Analysis Report
Chevron Corporation (CVX) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report
Teladoc Health, Inc. (TDOC) : Free Stock Analysis Report
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