Stocks opened higher on Monday ahead of what is sure to be another busy week for investors, as they assess some major economic indicators. Furthermore, with many more big-names set to report their quarterly earnings this week, it’s time to take a look at a few stocks investors might want to buy.
Investors have started to react to news that capital spending seems to be booming. Credit Suisse estimated that the amount of money companies spent on big-ticket items surge 20% in the first quarter, which would mark the biggest quarterly growth rate since 2011. Some of the biggest spenders so far include tech giants Google parent Alphabet (GOOGL) and Facebook (FB) .
Moving on, titans from Disney (DIS) to Nvidia (NVDA) are set to report their quarterly earnings results this week. With that said, investors need to hunt for companies that are set to report better-than-expected quarterly earnings results while market uncertainty remains.
Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to surprise, in one way or the other. This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Today, we are giving our readers a free look at three of these strong stocks ahead of their upcoming earnings reports. Check them out now:
Top Penny Stocks To Watch For 2019: MGM Growth Properties LLC(MGP)
One of the best stocks of the last decade has delivered eye-popping total returns of 1,311% with a relatively simple business model — and one that has mostly remained out of sight. MGP Ingredients operates as a contract distiller for premium brands large (Diageo) and small (various regional labels). In other words, it’s in the business of making whiskeys, gins, and vodkas.
After shares rose 54% in 2017, there’s still plenty to like about the company. I actually encouraged investors to sell the stock in late October, but it has gained 47% since then. Oops. After reading through the full-year 2017 earnings report, it’s clear that the business has earned its premium valuation. Can I change my wager, Mr. Dealer?
Last year MGP Ingredients grew year-over-year revenue 9.2%, boosted its gross margin to 21.9% from 20.5%, and converted a record 12% of sales into net income. Importantly, premium beverage alcohol sales — the highest margin product — jumped over 18% in the year-over-year comparison. While primarily a distiller, the company has worked to diversify its business over the years by vertically integrating operations, which means it sells agricultural byproducts leftover from the upstream distilling process for both animal feed and human food ingredients.
Those provide important sources of value, but they’ll be taking a backseat to premium alcohols in 2018 and 2019 when more valuable aged whiskey products will be leaving the warehouse. The expected result: MGP Ingredients thinks operating income will grow 10% to 15% in 2018, and another 15% to 20% in 2019.
Throw in projects that add value without showing up on financial statements, such as sourcing 100% renewable energy and ditching single-use plastic consumables at its operating assets, and investors can find a lot to like about this whiskey stock. It remains a buy for the foreseeable future.
Top Penny Stocks To Watch For 2019: Polo Ralph Lauren Corporation(RL)
Moving on, Ralph Lauren is another famous name in retail that has outperformed the S&P 500 by a wide margin. The stock has soared 59% over the last year and has also climbed 5.6% over the last 12 weeks. Ralph Lauren’s quarterly revenues are expected to dip by 4.7% to hit $1.49 billion. At the other end of the income statement, RL is also projected to experience a decline from the prior-year period.
Our current estimates are calling for Ralph Lauren’s quarterly earnings to slip by 3.4% to hit $0.86 per share. However, the company is currently a Zacks Rank #2 (Buy) and rocks an earnings ESP of 2.92%, mostly because its bottom line estimates have climbed recently. RL’s Most Accurate Estimate comes in at $0.88 per share, which is 2 cents above our current consensus estimate. This means that the upscale fashion giant could impress investors with a bottom line beat that might send its stock up, at least in the near-term. Ralph Lauren is set to report its quarterly results before the opening bell on Wednesday, May 23.
Top Penny Stocks To Watch For 2019: Boeing Company (BA)
Boeing Co (NYSE:BA) went from a frustratingly stubborn stock to one that couldn’t be stopped. Consider that BA stock was flat from January 2014 through October 2016, almost a three-year lull. However, shares then exploded 90% in 2017.
So what now?
It obviously wouldn’t be surprising to see Boeing stock settle down and consolidate a bit. Even bouncing between $300 and $360 for a few quarters would represent a relatively healthy consolidation period.
I like BA for its intense earnings growth, commitment to capital return and huge free-cash flow. It’s not the cheapest stock in the world anymore, but valuation and consolidation aren’t enough of a reason to sell the stock.
Shares still look great in the short-term, as our chart shows. Poking through resistance with plenty of support nearby, BA stock could retest its old highs if these patterns hold steady. It’s got bullish momentum and isn’t overbought yet either.
Top Penny Stocks To Watch For 2019: Best Buy Co., Inc.(BBY)
Things have gone remarkably well for Best Buy lately, especially considering how vulnerable investors thought the retailer was to "showrooming," or the shopper habit of examining products at brick-and-mortar stores before ordering them at lower prices from online rivals.
IMAGE SOURCE: GETTY IMAGES.
Best Buy made the appropriate changes to adjust to that trend, and its strategic initiatives are clearly working. Comps gains sped up to a 6% pace in fiscal 2018 from a flat result in the prior year even as profitability held steady. CEO Hubert Joly and his team are expecting comps gains to slow back down to about 2% in fiscal 2019, and earnings will also be hurt by more investments in its growth initiatives. However, Best Buy’s strong financial position should allow it to navigate this tricky retail environment better than most of its rivals, and that’s great news for its shareholders.
Top Penny Stocks To Watch For 2019: Repligen Corporation(RGEN)
Repligen lives in the biopharma sector, but it doesn’t bother with the usual regulatory headaches. That’s because the company supplies processing equipment and consumables required to test and manufacture biologic drugs, rather than develop therapeutics in risky clinical trials. That simple hack allows it to piggyback on the overall growth of biopharma without the commensurate risks.
It’s been a great business strategy so far. Shares are up 600% in the last 10 years, although a market cap of $1.6 billion hints that there’s plenty of room for expansion for the bioprocessing leader.
In 2017, Repligen reported total revenue of $141 million. That’s hardly a drop in the biopharma bucket, but it amounted to an impressive 35% jump from the prior year. Management sees much of the same in the year ahead, thanks largely to a recent acquisition. The bioprocess leader expects total sales of $180 million to $186 million at gross margin of up to 56.5% in 2018. That could deliver adjusted net income of up to $32 million this year, compared to just $27 million last year.
Just as in prior years, acquisitions and organic growth should continue to power the business higher for the foreseeable future. Repligen is also perfectly positioned to exploit the shift toward single-use processing equipment, which allows biologic drug manufacturers to greatly reduce contamination risks and downtime while improving margins and production volumes.
Case in point: The company recently announced the first and only commercially available single-use purification column suited for commercial biologics production. Products like that may go largely unnoticed by investors, but they could very well end up being a game-changer for customers.