Earnings season has now kicked off, and word on the Street is that it’s going to be a very good one. Overall S&P 500 profits are expected to soar by 11.2% in Q417 according to UBS strategist Keith Parker. Parker believes that this would be the second-strongest earnings growth period since 2011. The economy has momentum and all sectors are expected to post increases.
With this bullish outlook in mind, I decided to look for two ‘Strong Buy’ stocks to keep a close eye on ahead of earnings. I found these stocks using TipRanks’ nifty Earnings Calendar. The Calendar enables you to scan for stocks with upcoming earnings report and a ‘Strong Buy’ analyst consensus rating.
In this case, I specifically looked for stocks with a ‘Strong Buy’ consensus from the best-performing analysts on Wall Street. This means cutting out recent unhelpful stock ratings from under-performing analysts. The result: a list of two stellar stocks. So now let’s delve in and see which top stocks are hot right now:
E-commerce giant Amazon.com, Inc. (NASDAQ:AMZN) is out with its fourth-quarter numbers on February 2 after the close. GAAP EPS is estimated to come in at $1.89 on $59.6B Revenue, $1.5B in GAAP operating income. Following the Q3 print, Amazon has now recorded 60 Straight Quarters of 20%+ revenue growth.
And as for Q4, Amazon has already disclosed that tens of millions of Alexa-enabled devices were sold worldwide over the holidays. This is backed up by strong holiday retail sales data. According to Mastercard SpendingPulse, US holiday sales increased 4.9%, the largest year-over-year increase since 2011.
Top RBC Capital analyst Mark Mahaney may no longer list Amazon as one of his top three large-caps, but AMZN still ranks very highly on the Street’s scales. Five-star Oppenheimer analyst Jason Helfstein has just assigned a Buy rating and bullish $1,450 price target to AMZN. He says “We are naming AMZN our top 2018 large-cap pick after strong 2017 performance (+56% vs. +19% for S&P 500) and increasing our target to $1,450 from $1,330.” The new price target indicates 11% upside potential. Helfstein further explains:
“Amazon is best positioned among our large-cap universe to benefit from secular trends — shift to ecommerce, Public Cloud, Automation and Digital Advertising — further supported by an improving global macroeconomic backdrop and domestic tax reform.”
Indeed, we can see that Amazon has big backing from the Street. In the last three months, the stock has received 30 buy ratings and only 1 sell rating. The average analyst price target stands at $1,353.
Alphabet Inc (NASDAQ:GOOGL) will report Q4 results on February 1st after the close. The Street is looking for gross revenue of $31.57B and net revenue of $25.54B. GAAP EPS is estimated at $9.99 up from $9.36 last year. While GOOGL had a stellar year in general, investors are expecting that the tech giant ended the year on a high note. A very strong holiday retail season likely gave a solid boost to Google’s ad revenue for the quarter. And looking forward, a weakening US dollar and upcoming tax reform should help push 2018 estimates higher.
Analysts are singing the praises of GOOGL — with top Robert W Baird analyst Colin Sebastian calling it his number 1 stock. He makes the unique (but apt) comparison to California’s giant redwood trees:
“Despite significant outperformance vs. broader markets, Internet platforms still represent compelling investments… We believe they share characteristics with the ‘giant redwoods’ of the West Coast – dominance within their ecosystems, enduring growth, and ability to withstand a variety of threats.”
TipRanks reveals that this ‘Strong Buy’ stock stacks up well from a Street perspective. In the last three months, top analysts have published 19 buy ratings on GOOGL. This is versus just three hold ratings.
Meanwhile the average analyst price target stands at $1,194, with the highest price target from Jefferies’ Brent Thill. His $1,350 PT suggests upside of close to 20%. “We see Google as having the clearest path of any company to $1 trillion, with multiple meaningful opportunities (both near and longer-term) in play,” says Thill.