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"At the end of the day, all stock price movements can be traced back to earnings." Read that last line again…so it sticks! It's true because when investors buy shares in a stock they are actually buying part ownership in that company. And owners of companies, big and small, are always focused on the same thing…making money! In the stock market, we call that earnings. With earnings being of such great importance, it means earnings season is prime time for investors. If the companies you own have good news, then their stocks will immediately jump higher. Especially in a market like today's when so many stocks are oversold. And yes, even in the midst of a bear market or rising interest rates, companies with great earnings reports shoot higher. Unfortunately, if your companies disappoint, they will gap down HARD and you will be handed stiff losses. Especially in a market like this where there is so much on the table. The lofty valuations of growth stocks continue to be tested. If these stocks do not respond by delivering that promised growth, they are slaughtered following their reports. Not surprisingly investors have long sought a reliable "whisper number" they could use before companies report earnings. Truly, this would be the Holy Grail of investing. With that information in hand, an investor would have a portfolio that lights up like a Christmas Tree every earnings season. Our research team has spent many long years in the hunt for this coveted whisper number and it is with great pleasure that I can say: WE FOUND IT!!! Below I will detail what we discovered and better yet, how you can profit from these whispers this earnings season…and every earnings season thereafter. More . . . | ||||||||
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| Pushing Ahead When All Others Have Failed Nobody understands earnings data more than Len Zacks. Remember he is the one who uncovered the power of earnings estimate revisions that is the cornerstone of the Zacks Rank for stocks and its +25.0% average annual return. So several years ago, our executives met with him to start this project to find a reliable earnings whisper number. He told us not to waste our time. Why? He cited numerous such projects undertaken by other leading researchers over the years. Each time they tried and failed. In fact he shared with us his previous efforts that also ended in futility. He said emphatically: "I can tell you with 70% accuracy which stocks are more likely to beat estimates. But beating estimates and the share price moving higher are two very different things." Certainly you know what he's saying. How many times have you owned a stock that supposedly beat estimates and yet the price went down afterwards? (Too many times is the answer...we've all been there). They pleaded with him to try once again. He begrudgingly accepted the challenge with the help of others here at Zacks, like Kevin Matras, who have developed many of our most profitable trading strategies. There was very little success early on. None of the new theories were panning out. Yet the toughest part was to get sufficient new data points in place to test. When this new class of earnings data was finally installed, then things got real interesting. The Discovery of These "Whispers" What finally got us on the right track was going back to the basics of the earnings estimate philosophy at the heart of the Zacks Rank. Here are the clues:
Add it all up and there is no good reason for an analyst to create a higher estimate close to the date of the earnings report unless they had a DARN GOOD REASON. Focusing in on those estimates closest to the earnings announcement is where we found the "whisper that becomes a scream"…a clear indication from the analyst community about specific stocks more likely to beat earnings by a wide margin. And most importantly, rise on that news. Where to Find Such Stocks I can't share all the details of the secret formula with you, but our system relies on two under-used signals coming from the brokerage analyst community. These two whispers are then layered on top of other time-tested elements such as the Zacks Rank and Zacks Industry Rank to find only the best stocks… in the best industries… with the best chances of beating earnings and quickly rising in price. If you would like to receive our precise whisper trading signals through the heart of this earnings season, I invite you to check out our Zacks Surprise Trader. This is the time to do it. Right now, I'm preparing to add several stocks flashing "Positive Surprise" that are reporting earnings in the coming weeks. Don't miss your chance to beat Wall Street to the punch and make the most of the potential double-digit price pops. Our signals predict big positive surprises and they've been right 80.77% of the time. In fact, our Surprise Trader portfolio recently closed gains of +114.4%, +77.9%, +55.9%, +36.6%, and +22.5% in as little as 6 days.¹ This earnings season presents unusual opportunities because so many stocks are oversold. Don't miss the chance to pursue quick, substantial gains from the flurry of positive surprises we're turning up. As a bonus, you're invited to download our "Early Warning Alert" report free. It reveals Stocks to Sell Before They Report Earnings in the Coming Weeks. Our strategy works both ways, and you can use this report to avoid companies that are likely to report the worst negative surprises from April 18-29. But don't delay. We can't let too many share our "surprise" recommendations so they are generally closed to the public. Today the portfolio is open again, but your chance to gain access ends on midnight Sunday, April 17. See our Surprise Trader stocks now » Wishing you great financial success,
Dave Bartosiak is Zacks' resident earnings surprise expert. He selects stocks and delivers commentary for our Surprise Trader portfolio. | ||||||||
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| ¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. This free resource is being sent by Zacks.com. We look for investment resources and inform you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms of Service". https://www.zacks.com/terms_of_service Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research is not a licensed securities dealer, broker or US investment adviser or investment bank. The Zacks #1 Rank Performance covers the period beginning on January 1, 1988 through February 28, 2022. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank #1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance_disclosure for information about the performance numbers displayed above. Zacks Emails Zacks Investment Research |
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