Top Picks Heading into Earnings Season Top Picks Heading into Earnings Season

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By Ronald Tech

Steel Dynamics – Worth the Investment?

Investors are gearing up for the Q4 earnings season, with three prominent Zacks top-ranked stocks, including Steel Dynamics, set to release their quarterly results on January 23. Steel Dynamics, a leading steel producer, is currently positioned as a Zacks Rank #1 (Strong Buy) as it approaches its Q4 report. Despite an expected contraction in bottom line due to declining steel prices, the company’s undervalued shares at a 10.5X forward earnings multiple have caught the attention of investors. With Q4 EPS estimates witnessing a significant surge of 18% in the last 60 days, a positive trend is indicative of a hopeful financial guidance from Steel Dynamics in the near future.

Netflix – Amidst Shifting Focus

Netflix, the streaming giant, is holding a Zacks Rank #2 (Buy), and while they have pivoted away from providing subscriber growth outlook, they still remain an attractive investment opportunity. Projected Q4 EPS of $2.20 per share marks a substantial growth from the prior-year quarter, with an expected 11% rise in Q4 sales to $8.72 billion. Moreover, annual earnings for fiscal year 2023 are anticipated to increase by 22%, further strengthening their position. With an optimistic forecast of a 32% expansion in FY24 EPS to $18.07 per share and a 14% rise in total sales to $38.4 billion, Netflix presents a compelling investment case going into earnings season.

General Electric – A Diverse Consideration

Multi-sector conglomerate General Electric, poised for its fourth-quarter report, upholds a Zacks Rank #2 (Buy). Despite a projected decline in Q4 earnings, the company’s diverse business model continues to support its bottom line. Earnings expectations for FY23 are positive, with an estimated 1% increase, while a significant 69% surge in FY24 EPS to $4.49 per share paints a promising picture. General Electric has also exceeded earnings expectations for the last four quarters, with an impressive average earnings surprise of 53.42%, further solidifying its potential for investors.

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Potential Market Impact

As earnings approach, investors are advised to keep a close watch on developments from Steel Dynamics, Netflix, and General Electric, as favorable Q4 results and optimistic financial guidance from these companies could potentially drive significant upside in the market.