4 Stocks You Should Be Watching This Earnings Season

 | Apr 15, 2018 | 10:00 AM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:












We are now starting to get into the meat of the first-quarter earnings season. And as I have projected for weeks, this is starting to stabilize the markets. Equities had a good last week and earnings results have largely been more solid to this point. The positive impacts from tax reform and a much lower corporate tax rate are being felt, especially for firms that get the majority of their business domestically.

Homebuilders like Lennar (LEN) have seen their effective tax rates slashed, for instance. The big homebuilding name crushed earnings expectations last week thanks both to good growth and an effective tax rate that will move from 34% in 2017 to 24% in 2018.

Financial earnings largely were slightly above expectations while revenues were mostly in-line. BlackRock (BLK) had a nice earnings beat.

Here are some smaller names I have my eye on this earnings season.

Let's start with Synchrony Financial (SYF) which reports first-quarter earnings next Friday, April 20. I look for the financial lender to post its third straight quarter of positive earnings surprises. The corporate tax cut should deliver almost a $1.00 a share of additional earnings in 2018. This stock is still relatively cheap at just over 10 times forward earnings. The company should probably announce a solid dividend hike after second-quarter earnings as well. Last year their payout went up 15% after second-quarter results were announced.

I think Lennar gave a nice prelude to the earnings tailwind homebuilders will have behind their back in 2018. TRI Pointe Group (TPH) could make it four quarters in a row if it beats both top and bottom-line estimates when it reports around April 25. Their effective tax rate should drop to 25% to 26% in 2018 which should boost earnings throughout the year. Another relatively cheap stock at just over nine times forward earnings.

My favorite homebuilder, LGI Homes (LGIH)  , does not report first-quarter earnings until May. This name has been crushing expectations even before the tax reform was signed and I expect it to continue to do so. Revenue rose over 70% year-over-year within fourth quarter results. Home closings in the first quarter were up over 60%, so it is hard to imagine the company doing much but delivering great first-quarter results. Despite this growth, the stock sells just north of 11 times forward earnings.

Finally, I expect FireEye (FEYE) to continue to post results showing a turnaround is progressing at the internet security company when it reports early in May. My "top stock" pick for the year here on Real Money has had a solid 2018 so far. The shares have started to break out recently and Morgan Stanley lifted its price target as it sees the company lifting free cash flow by 12% annually through 2022. FireEye still makes a logical buyout target should M&A remain strong in tech space as well.

This commentary originally appeared on our sister site Real Money Pro. Click here to learn about this dynamic market information service for active traders and to receive daily columns from Bret Jensen, Ed Ponsi, Paul Price and others.

Columnist Conversations

In GS I see key price support at the 224.49-226.42 area.  I also have timing for a possible low.  I ...
Tesla (TSLA) has tested our long-term bounce zone @ 283.90-258.95 a few times. These have been BUYING opportun...
We have a big winner here, let's roll it up to a higher strike   SOLD SRPT NOV 140 CALL AT 26 (in ...
We still like this name and want to give it more time. SOLD AAPL OCT 220 CALL AT 6.9 (in at 10) BOUGHT A...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.