The stock market dipped on Monday on low Thanksgiving week trading volumes. The market then bounced back through morning trading Tuesday.
The mixed start to the holiday-shortened week came after retail giants reported last week and provided much-needed insights into changing consumer habits. Shoppers and the companies confirmed that outside of home improvement spending, they are sticking to the essentials as even higher-income shoppers tighten their purse strings as inflation rages on.
Taking a step back, the outlook for S&P 500 earnings continues to decline for fiscal 2023, with the aggregate total down over 8% from the peak. Still, overall S&P 500 earnings are projected to be up 2.8% in 2023 on 2.5% higher revenue. This is expected to follow 4.9% earnings expansion this year on 10.2% stronger sales in 2022.
Estimates for S&P 500 earnings and revenue could certainly fade further. But as it stands, the outlook doesn’t seem to signal that the U.S. is on the cusp of a massive economic downturn.
Plus, it is crucial to remember that Wall Street has been actively pricing in falling earnings and rising rates for a long time now and they are almost always ahead of Mainstreet. The market has also surged since the start of the fourth quarter, and the third year of a presidential cycle has historically been bullish for stocks.
With this in mind, investors can utilize the Filtered Zacks Rank 5 Stock Screen to help find potentially winning stocks that have provided upbeat EPS guidance as the larger earnings outlook fades heading into Thanksgiving and the final month of 2022.
Zacks Rank #1 (Strong Buy) stocks outperform the market in both good and bad times. However, there are over 200 stocks that earn a Zacks Rank #1 at any given time. Therefore, it’s helpful to understand how to apply filters to the Zacks Rank in order to narrow the list down to a more manageable and tradable set of stocks.
Clearly, there are only three items on this screen. But together, these three filters can result in some impressive returns.
• Zacks Rank equal to 1
Starting with a Zacks Rank #1 is often a strong jumping off point because it boasts an average annual return of roughly 24.4% per year since 1988.
• % Change (Q1) Est. over 4 Weeks greater than 0
Positive current quarter estimate revisions over the last four weeks.
• % Broker Rating Change over 4 Week equal to Top # 5
Top 5 stocks with the best average broker rating changes over the last four weeks.
This strategy comes loaded with the Research Wizard and is called bt_sow_filtered zacks rank5. It can be found in the SoW (Screen of the Week) folder.
Here are two of the five stocks that qualified for the Filtered Zacks Rank 5 strategy today…
Global Partners GLP
Global Partners is one of the largest independent owners, suppliers, and operators of gas stations and convenience stores in the Northeast, boasting roughly 1,700 locations. GLP also owns, controls, or has access to one of the largest terminal networks in New England and New York. Global Partners then distributes gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers, and commercial customers. The firm also transports petroleum products and renewable fuels by rail from the mid-continental U.S. and Canada.
Global Partners is part of Oil and Gas - Refining and Marketing-Master Limited Partnerships space that is in the top 19% of Zacks industries. The company has crushed our bottom-line estimates in the trailing four quarters by an average of 290%, including a 135% beat in early November. Analysts raced to update their EPS outlooks for FY22 and FY23 as the oil and gas industry continues to boom. GLP shares have surged 85% in the last two years, including a 30% jump in 2022. Plus, its 8.2% dividend yield tops its industry’s 7.2% average.
Enterprise Financial Services EFSC
Enterprise Financial Services Corp is a financial services holding company with a core focus on privately-held businesses, their owner families, and beyond. EFSC’s Enterprise Bank & Trust offers a full range of commercial and personal banking, alongside trust and wealth management services. The company operates branches in Arizona, California, Kansas, Missouri, Nevada and New Mexico, with SBA loan and deposit production offices across other various states.
Enterprise Financial topped our Q3 earnings estimates in late October for its eighth straight beat. Zacks estimates call for its revenue to climb 22% in 2022 and another 14% in 2023 to boost its adjusted earnings by 2% and 9.5%, respectively. EFSC’s industry ranks in the top 6% of over 250 Zacks industries. The stock has climbed 18% in the last six months and 50% in the past two years.
See the rest of the stocks on this list and start trading the Filtered Zacks Rank 5 (or any of our other strategies) in your own account. Remember, the key to successful screening is finding screens that have produced profitable results in the past. And that's exactly what you get with the Research Wizard stock picking and backtesting program.
Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.
Click here to sign up for a free trial to the Research Wizard today.
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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance/
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