{"id":20623,"date":"2023-02-22T07:30:47","date_gmt":"2023-02-22T12:30:47","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=20623"},"modified":"2023-02-22T07:30:47","modified_gmt":"2023-02-22T12:30:47","slug":"three-stocks-that-are-bucking-the-earnings-trend","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/three-stocks-that-are-bucking-the-earnings-trend\/","title":{"rendered":"Three Stocks That Are Bucking the Earnings Trend"},"content":{"rendered":"

There’s an old saying on Wall Street that says, “analysis of the averages produces average analysis<\/em>.”<\/p>\n

The “averages” refers to the popular indexes, while the saying is a nod to missing opportunities if you only focus on what they’re doing.<\/p>\n

And I can’t think of anything truer when it comes to corporate earnings.<\/p>\n

So today, I’ll share three companies with rising profits despite the market’s negative earnings growth…<\/p>\n

Moving in the Wrong Direction<\/h2>\n

About 82% of the companies in the S&P 500 have reported earnings for the fourth quarter.<\/p>\n

And while 68% are beating their earnings estimates for the quarter, the growth rate in earnings has fallen into negative territory for the first time since 2020.<\/p>\n

Even more concerning is that forecasted earnings are also moving in the wrong direction. Back at the end of December, analysts pegged S&P 500 earnings growth at about 5% for 2023.<\/p>\n

Now, earnings growth for the next 12 months has also turned negative.<\/p>\n

But here’s the thing… the news on the earnings front isn’t bad everywhere. You just have to look beyond the S&P’s uninspiring figures.<\/p>\n

In fact, if you dig into the details, you can find companies in the midst of a profit boom.<\/p>\n

That’s why I turn to a special type of quant factor to pinpoint companies expecting growth… and it’s one that’s generated outsized stock returns historically.<\/p>\n

Tracking Profits with Analyst Revisions<\/h2>\n

Many investors mistakenly think that a high level of earnings is the trick to finding stocks that’ll outperform.<\/p>\n

But when it comes to corporate profits, you should focus on the trend instead.<\/p>\n

That’s also known as analyst revisions, which reflects how quickly Wall Street analysts are raising or lowering profit estimates for companies.<\/p>\n

And targeting companies with the largest positive change in revisions has historically been a great way to beat the market.<\/p>\n

I’ve verified that in my own studies. My revision factor is made up of things like sales and earnings estimates, so I can track which stocks are seeing the best improvement in their financial outlook.<\/p>\n

Top companies based on my analyst revisions factor have delivered just over 18% in annualized returns going back to the start of 2010… far outpacing the benchmark.<\/p>\n

That’s why looking beyond the averages can guide you to better opportunities than what the indexes have to offer.<\/p>\n

Here’s where my analyst revisions factor says the profit outlook is improving now…<\/p>\n\n\n\n
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Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Boosting the Bottom Line<\/h2>\n

I watch my analyst revisions factor like a hawk during earnings season.<\/p>\n

As companies release their quarterly financial reports and discuss the outlook, analysts change their estimates to reflect new information.<\/p>\n

That makes it a great time to scour the stock universe for companies seeing a big markup in their financial projections.<\/p>\n

That’s especially the case in this market environment, where companies that can buck the trend of weaker profit outlooks will stand out.<\/p>\n

Here’s a peek at three stocks to keep on your radar. They have released earnings and are now ranked among the top for their analyst revisions score:<\/p>\n