6 Must-Buy Stocks Ahead of Earnings Results This Month

·6-min read

We are in the middle of the first-quarter 2021 earnings season. In the January to March period, corporate revenues and profits across the board were boosted by aggressive nationwide COVID-19 vaccination, a faster-than-expected reopening of the economy, unprecedented fiscal stimulus injected by the government and an extremely accommodative Fed. These have been reflected in the impressive results so far.

Meanwhile, five major companies with a favorable Zacks Rank are poised to beat earnings estimates this month. Investment in these stocks is likely to provide a solid upside in the near future.

Robust Q1 Earnings Results So Far

The first-quarter 2021 earnings season started with much vigor. As of May 4, 343 S&P 500 companies reported results. Total earnings of these companies were up 49.2% year over year on 10.6% higher revenues, with 87.5% of companies surpassing EPS estimates and 78.1% beating on revenues.

For the first quarter as a whole, total earnings of the S&P 500 companies are expected to be up 44.1% from the same period last year on 9.1% higher revenues. These estimates compare favorably with the 20.4% jump in earnings on 5.6% higher revenues projected at the beginning of the reporting cycle.

Our Top Picks

We have narrowed down our search to six stocks each of which carries either a Zacks Rank #1 (Strong Buy) or 2 (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.

The chart below shows the price performance of our six picks in the last quarter.

Target Corp. TGT operates as a general merchandise retailer in the United States. It offers beauty and household essentials, food assortments, including perishables, dry grocery, dairy, and frozen items; and apparel, accessories, home decor products, electronics, toys, seasonal offerings, and other merchandise.

This Zacks Rank #2 company has an Earnings ESP of +7.42% for first-quarter fiscal 2021 (ended April 2021). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 7 days for Target. It has a trailing four-quarter earnings surprise of 53.3%, on average. The company will its release earnings report on May 19, before the opening bell.

Ralph Lauren Corp. RL designs, markets and distributes lifestyle products in North America, Europe, Asia and internationally. The company is progressing well with its “Next Great Chapter” plan that was announced in June 2018. This strategic growth plan focuses on delivering sustainable long-term growth and value creation.

The company has an Earnings ESP of +6.25% for fourth-quarter fiscal 2021 (ended March 2021). Ralph Lauren has an expected earnings growth rate of more than 100% for the current fiscal (ending March 2022). The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the last 7 days. This Zacks Rank #1 company will release earnings on May 20, before the opening bell.

Kohl's Corp. KSS operates as a retail company in the United States. It offers branded apparel, footwear, accessories, beauty, and home products through its stores and website. The company has an Earnings ESP of +155.56% for first-quarter fiscal 2021 (ended April 2021).

Kohl's has an expected earnings growth rate of more than 100% for the current fiscal (ending January 2022). The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the last 30 days. It has a trailing four-quarter earnings surprise of 52.5%, on average. This Zacks Rank # 1 company will release earnings on May 20, before the opening bell.

Agilent Technologies Inc. A is an original equipment manufacturer of a broad-based portfolio of test and measurement products serving multiple end markets. The company has an Earnings ESP of +1.57% for second-quarter fiscal 2021 (ended April 2021).

Agilent Technologies has an expected earnings growth rate of 18% for the current fiscal (ending October 2021). The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days. It has a trailing four-quarter earnings surprise of 16.9%, on average. This Zacks Rank # 2 company will release earnings on May 25, after the closing bell.

NVIDIA Corp. NVDA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, the company’s focus has evolved from PC graphics to AI- based solutions that now support high-performance computing, gaming and virtual reality platforms.. The company has an Earnings ESP of +2.51% for first-quarter fiscal 2022 (ended April 2021).

NVIDIA has an expected earnings growth rate of 35.6% for the current fiscal (ending January 2022). The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last 30 days. It has a trailing four-quarter earnings surprise of 10.7%, on average. This Zacks Rank #2 company will release earnings on May 26, after the closing bell.

HP Inc. HPQ provides personal computing and other access devices, imaging and printing products, and related technologies, solutions and services in the United States and globally. It operates through three segments: Personal Systems, Printing, and Corporate Investments. The company has an Earnings ESP of +4.49% for second-quarter fiscal 2021 (ended April 2021).

HP has an expected earnings growth rate of 46.5% for the current fiscal (ending October 2021). The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last 30 days. It has a trailing four-quarter earnings surprise of 22.7%, on average. This Zacks Rank #2 company will release earnings on May 27, after the closing bell.

+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities

In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.

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HP Inc. (HPQ) : Free Stock Analysis Report

Target Corporation (TGT) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Ralph Lauren Corporation (RL) : Free Stock Analysis Report

Kohls Corporation (KSS) : Free Stock Analysis Report

Agilent Technologies, Inc. (A) : Free Stock Analysis Report

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