5 Best Stocks To Buy Ahead Of Q4 Earnings Season
Zacks Investment Research | Jan 09, 2018 09:50PM ET
Market pundits have set their eyes on Corporate America as it is gearing up to report Q4 earnings results later this week. While the broader market is expected to face a period of consolidation, bank majors may feel the heat due to adjustments in values of deferred tax assets and liabilities and charges taken against earnings for repatriation.
The energy sector is poised to report highest earnings growth among all sectors, with technology, Industrial products and materials contributing the maximum. Thus, investing in fundamentally solid stocks from these sectors is a well thought-out strategy as these are likely to make the most of the Q4 earnings season. Here, we should bear in mind that better-than-expected earnings performances generally lead to a rally in the share price.
Market Consolidation on the Anvil
Of late, all major bourses have been hitting a series of record highs, with the S&P 500 crossing the coveted 2,700 mark for the first time this year. But, this uptrend may follow a fresh period of consolidation in the fourth-quarter earnings season.
And why not? In each of the first three quarters of 2017, the S&P 500 climbed around 5% heading into the earnings season. As the earnings seasons proceeded and companies started beating estimates, the market consolidated. Thus, a similar sort of market consolidation is expected this reporting cycle. After all, the index had already posted gains of 6.1% during the fourth quarter, which marked the ninth straight quarter of gains for the broader index.
S&P 500’s Pre-Earnings Price Performance
| Quarter | Price Performance (Pre-Earnings Season) |
| Q1 2017 | 5.1% |
| Q2 2017 | 5.0% |
| Q3 2017 | 5.3% |
(Source:Original post
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