These 6 Stocks Could Beat on Earnings Day and Have Strong Technical Charts to Match
Trying to predict whether a company will meet, beat or disappoint consensus earnings expectations is anyone's game. To that end, Goldman Sachs has compiled a list of 25 U.S. stocks that it considers its most "out-of-consensus" opportunities.
For 13 companies on the list, Goldman equity analysts believe quarterly earnings will beat consensus estimates. For the other 12 companies, the firm believes earnings will disappoint.
Of the stocks that Goldman expects to beat on quarterly EPS numbers, TheStreet's chart expert, Bruce Kamich, has selected six that have strong technical charts to match.
We've included snippets of why Goldman analysts are bullish on each stock as well as Kamich's technical expertise.
Goldman Sachs expects Barrick Gold
to beat quarterly earnings estimates by more than 20%. Barrick Gold reports results on July 27.
Analysts, according to Thomson Reuters, forecast Barrick Gold to post a profit of 14 cents a share, up 185% from the year-earlier period.
Barrick Gold is on Goldman's Conviction Buy List. Analyst Andrew Quail has a 12-month price target of $94.
Quail sees a "23% upside to the stock over the next 12 months, as he sees the company well positioned to outperform on the back of a stabilizing gold price, and the low cost nature of its asset base. Andrew believes the company has numerous divestiture candidates within its portfolio, including its newly formed JVs at Zaldivar and Porgera. This could help the company achieve its 2016 debt reduction goal of $2 billion," the note said.
Bruce Kamich's Technical Analysis
In this daily chart of Barrick Gold, we can see that the stock made a low in September and in January it took off like a rocket. Prices are comfortably above the rising 50-day and 200-day simple moving average lines. The daily on-balance-volume, or OBV, line has been rising smartly, telling us that on most days, volume has been heavier when ABX has closed higher. This is a pretty good sign of accumulation or aggressive buying -- people willing to pay more to get long a stock.
Momentum (lower panel), or the rate of change of prices, is not signaling a bearish divergence that would make us a nervous long. So if there is a bullish earnings surprise for ABX, I think it will act as a turbo and will just kick prices higher.
Goldman Sachs expects Corning
to beat quarterly earnings estimates by 6%. Corning reports results on July 27.
Analysts, according to Thomson Reuters, forecast Corning to post a profit of 32 cents a share for the June-ending quarter, down 15% from the year-earlier period.
Corning is on Goldman's Conviction Buy List. Analyst Doug Clark has a 12-month price target of $27.
"Doug expects glass volumes to grow above normal seasonality in both 2Q and 3Q16," the note said. "Given the above-average profitability and high fixed costs of Corning's glass business, he expects a glass recovery to be positive from a mix and contribution margin standpoint. He sees several sources of optionality that are likely to drive outperformance for GLW longer term, including Gorilla Glass for auto, additional M&A, new Life Sciences products, and new Display products. Doug also believes the Optical business is likely to recover in 2Q and 3Q - which should contribute to improved profits and growth."
Technical Analysis
In this daily chart of Corning, we can see a sideways to higher trend the past 12 months. Prices recently broke out to the upside with a new high for the move up. Prices are above the rising 50-day and 200-day moving averages. The OBV line turned up back in September and indicates a long period of accumulation. In addition, there are no bearish divergences to distract us.
Like the chart of ABX, a bullish earnings report for GLW should reinforce the bullish move already in progress.
Goldman Sachs expects Masco
to beat quarterly earnings estimates by 9%. Masco reports results on July 26.
Analysts, according to Thomson Reuters, forecast Masco to post a profit of 42 cents a share for the June-ending quarter, up 12% from the year-earlier period.
Masco is also on Goldman's Conviction Buy List. Analyst Samuel Eisner has a 12-month price target of $37.
Eisner believes that key for Masco "is its exposure to rising TiO2 prices, which, together with low energy prices, is helping to drive Paint operating margins to 21%, significantly above the 18% margins which MAS believes to be the long-term average," the note said. "He believes rising TiO2 prices should be offset by price increases. Additionally, he believes consensus is being overly conservative with respect to the difficult margin comps in the prior year."
Technical Analysis
In this daily chart of Masco, we can see another bullish setup. MAS is above its rising 50-day and 200-day moving averages. The OBV line has improved from its October low, but the main thing I want to point out on this chart is what happened in January and February when MAS declined to $24 from $30. The OBV line hardly went down. This tells me that selling pressure was light on the decline and that the longs held onto their positions. You have to like that kind of commitment.
Goldman Sachs expects Nvidia
to beat quarterly earnings estimates by 8%. NVIDIA reports results in early August.
Analysts, according to Thomson Reuters, forecast Nvidia to post a profit of 38 cents a share for the June-ending quarter, up a whopping 650% from the year-earlier period.
Analyst Toshiya Hari has a buy rating and a 12-month price target of $54 on NVIDIA.
"Nvidia has a long history of beating Street estimates and [Hari] expects this trend to continue as he believes the Street underappreciates the impact of trends like VR proliferation, hyperscale adoption of accelerators, and automotive infotainment into current estimates," the note said. "NVDA has beat Street estimates 15 out of the last 16 quarters by an average of 21% and by 33% in the last four quarters.
Technical Analysis
In this daily chart of Nvidia, I see a strong uptrend with rising moving averages. The OBV line confirms the advance, and reactions to date have been shallow. One could say that the rally in NVDA is extended, but that does not mean that the next earnings report won't be a reason to push prices even higher.
Goldman Sachs expects Post Holdings
to beat quarterly earnings estimates by 7%. Post Holdings reports results in early August.
Analysts, according to Thomson Reuters, forecast Post Holdings to report a profit of 46 cents a share for the June-ending quarter, up 72% from the year-earlier period.
Analyst Jason English has a buy rating and a 12-month price target of $102 on Post Holdings.
"Jason expects the key catalysts for this quarter to be the egg industry's transition from supply shortage to normalization," the note said. "The less than smooth transition has resulted in a downward correction in spot egg prices, a development that is likely to elongate POST's EBITDA ramp in the Michael Foods segment (45% of FY16E EBITDA). Management was aggressive in sourcing supply from spot markets, while pruning its market-based price contracts to below 20%; it is in effect net short the egg market. Jason believes this will result in near-term earnings upside, while synergies in the cereal division are likely to provide a longer term boost."
Technical Analysis
In this daily chart of Post Holdings, we can see a similar bullish picture. Prices are in an uptrend above the rising 50-day and 200-day averages. The OBV line has been confirming the advance since February when buying became more aggressive. Momentum is not diverging from the price action, so no problems from our leading indicator.
Goldman Sachs expects Vulcan Materials
to beat quarterly earnings estimates by 20%. Vulcan Materials reports results in early August.
Analysts, according to Thomson Reuters, forecast Vulcan Materials to report a profit of $1 a share for the June-ending quarter, up 51% from the year-earlier period.
Analyst Jerry Revich has a buy rating and a 12-month price target of $146 on Vulcan Materials.
Revich's "bullish view is driven by strong pricing forecasts, as ongoing local aggregates market consolidation is driving pricing gains ahead of volumes in the early stages of recovery in this cycle. Jerry is positive on the US public construction cycle, aggregates pricing power driven by improving industry structure, and continues to see upside to mid-cycle valuations," the note said.
Technical Analysis
In this chart of Vulcan Materials, we can see another strong and vibrant uptrend with rising moving averages and a strong OBV line. VMC bottomed in January and has not looked back. A 50% advance is truly impressive and might frighten new longs, but this chart looks like it will only move higher, and pullbacks and corrections will likely be short lived.