Home Business Bank of America scoured hundreds of mutual funds with $1.5 trillion in...

Bank of America scoured hundreds of mutual funds with $1.5 trillion in assets and identified 7 neglected stocks poised to surge after crushing earnings

10
0
SHARE
Bank of America scoured hundreds of mutual funds with $1.5 trillion in assets and identified 7 neglected stocks poised to surge after crushing earnings

traders screen


Neil Hall/Reuters

  • Price swings in the stock market are usually wider during earnings season, providing an opportunity for stock pickers to profit from those moves.
  • Bank of America Merrill Lynch has identified seven companies its analysts expect to trounce consensus estimates for earnings — and see a large stock spike.
  • These companies are also underowned by active fund managers who manage $1.5 trillion in assets.
  • Visit BusinessInsider.com for more stories.

If there’s any time to be a stock picker, it’s during earnings season, according to Bank of America Merrill Lynch.

As S&P 500 companies roll out their first-quarter reports over the coming weeks, analysts are expecting the first year-over-year decline in earnings-per-share growth since 2016. For the diligent stock picker, the next few weeks will provide many opportunities to profit from the gains that accrue from companies that beat earnings expectations.

It also helps that analysts hesitate to publish earnings estimates that stray far away from what their peers expect. According to BAML, so-called consensus-estimate dispersion for the S&P 500 sits at 5.7%, below its long-term average of 9.6%. This means out-of-consensus calls that turn out to be right can be disproportionately rewarded.

As always, there’s also the risk of big losses if companies disappoint, which is why BAML’s equity strategists advice clients to understand the fundamentals of a company before making investing decisions timed around earnings reporting.

They’ve nonetheless provided a starting point by identifying the buy-rated companies that their analysts expect to beat earnings by more than the Street forecasts. In a recent note to clients, they further singled out the companies that are underowned by over 400 active funds with $1.5 trillion in assets under management.

The list below showcases companies that are underowned among funds, and which BAML analysts expect to outpace consensus earnings forecasts to the greatest degree. It is ranked in ascending order of their earnings-per-share Z-scores — or how much more bullish BAML’s analysts are compared to their peers.


Markets Insider

Ticker:FMC

Sector: Materials

Expected report date: May 6

BofAML vs. Consensus EPS Z-Score: 0.0

BofAML vs. Consensus Sales Z-Score: 1.1

Source: BAML

Take-Two Interactive Software


Markets Insider

Ticker:TTWO

Sector: Communication Services

Expected report date: May 15

BofAML vs. Consensus EPS Z-Score: 0.7

BofAML vs. Consensus Sales Z-Score: 0.3

Source: BAML


Markets Insider

Ticker:TWTR

Sector: Communication Services

Expected report date: April 23

BofAML vs. Consensus EPS Z-Score: 1.1

BofAML vs. Consensus Sales Z-Score: 0.7

Source: BAML


Markets Insider

Ticker: IR

Sector: Industrials

Expected report date: April 30

BofAML vs. Consensus EPS Z-Score: 1.1

BofAML vs. Consensus Sales Z-Score: 1.0

Source: BAML


Markets Insider

Ticker:SBUX

Sector: Consumer Discretionary

Expected report date: April 25

BofAML vs. Consensus EPS Z-Score: 1.3

BofAML vs. Consensus Sales Z-Score: 0.5

Source: BAML


Markets Insider

Ticker:IQV

Sector: Healthcare

Expected report date: May 1

BofAML vs. Consensus EPS Z-Score: 1.8

BofAML vs. Consensus Sales Z-Score: 1.2

Source: BAML


Markets Insider

Ticker:REG

Sector: Real Estate

Expected report date: May 2

BofAML vs. Consensus EPS Z-Score: 2.1

BofAML vs. Consensus Sales Z-Score: 4.2

Source: BAML

Get the latest Bank of America stock price here.

More:

Investing
BI Prime
Stock Market
Earnings

Read More

Leave a Reply