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The renowned analyst and book author has unveiled a special list of stocks he says will soon put the rest of the market…

Jamie Cameron
25. 10. 2022
5 min read

The legendary analyst presented a list of companies based on simple metrics and indicators. If history repeats itself, these are some really interesting picks for companies with decent potential!

According to the famous analyst, these stocks are guaranteed not to disappoint your expectations

Matt Krantz - author of several books and countless popular and analytical articles. Last time, I presented you with his picks for companies he'd be guaranteed to avoid. Now, let's take a look at his selection of titles that he thinks are, on the contrary, very decent choices!

The legendary analyst presented a list of companies he would now avoid like the devil. Do you own any of them?

We'll go over this pick again with the help of numbers and an interesting metric - Shares of S&P 500 companies that have consistently outperformed earnings over the past 12 months are actually down only 8% on average this year. That's significantly better than the 20% decline in the S&P 500 over that time.

YTD performance of the index so far is over 22% in the red

"The current 25% decline in stocks largely reflects the upward movement in interest rates, but does not include the decline in earnings that we believe is likely as the economy slows, " said Jim Besaw, chief investment officer at GenTrust.

What does that mean? It means that companies that beat earnings projections will be valued all the more highly. Especially as earnings growth in the S&P 500 slows. So, according to Krantz, these are the companies to watch because they are well positioned to outperform their peers.

Earnings season is in full swing. Meanwhile, analysts believe that earnings for S&P 500 companies will only grow by a weak 2. 4%. That would be the lowest earnings growth since earnings fell 5.7% in the third quarter of 2020 during the pandemic.

But there's still a chance that earnings will surprise. Most companies are reporting better-than-expected earnings so far . And judging by historical norms, if it happens again, earnings growth in the S&P 500 could end up closer to 6% or 7%!

So which companies could this be applied to? For example, T-Mobile $TMUS+0.7% is the king of earnings surprises in the S&P 500 index. T-Mobile US doesn't just meet earnings estimates every quarter. She completely beats them time and time again.

In the past four quarters, the communications company has posted earnings that beat expectations by an average of 508%. Case in point, the second quarter. The company ended up reporting adjusted earnings of $1.94 per share, beating expectations by 454%.

This also makes T-Mobile one of the few stocks not in the red this year

And even that wasn't the biggest beat. T-Mobile US crushed earnings estimates by 1,122% in the fourth quarter of 2021. When you're beating estimates by that much and that regularly, it's no wonder the stock is up 15% this year.

Can T-Mobile US repeat that in the third quarter? Analysts think the company will earn 49 cents per share this quarter, down 63%. That's a low bar. The company will report on Oct. 27.

Even insurance company W.R. Berkley $WRB+1.1% is showing how much investors like surprises in the form of growth. The company's stock is up more than 30% this year. Why? Much of the gains are due to the company beating earnings estimates by an average of nearly 24% over the past four quarters.

Another green chart

In the second quarter alone, the company earned $1.12 per share, which was 30% more than expected. It is expected to report 2% lower earnings of 86 cents per share in the third quarter, when it reports on Oct. 24. That sounds like an easy hurdle to overcome. And - as you can see - it would mean the odds of the company executing perfectly on what we described at the outset. But not necessarily! Nothing is certain in investing, you know that.

Shares don't always rise after every earnings beat. Warehouse rental company Prologis $PLD-1.2% has beaten earnings estimates by an average of 115% in the last four consecutive quarters. Even so, the stock has fallen 40% this year as online trading has slowed.

Despite the earnings beat, investors clearly don't trust the company

What about other companies that Krantz believes are potentially capable of beating earnings and growing? Take $MET+0.4%, for example, it has beaten earnings by an average of 36.1% over the past 4 quarters. This year, it's up 7.43%.

MetLife is holding on to a modest gain

Further, on the other hand, it's a company that is beating earnings, yet its stock is falling. It's Ceridian $CDAY+0.1%, which has been punishing them a lot. A whole -47%. This is despite the fact that it has been beating earnings by 74.4% over the last year. ETSY $ETSY-0.2% is in a similar category, -55%, but beating earnings by 34.1%.

Also included in the list are Valero Energy $VLO-0.2%, Gartner $IT+0.6%, Travelers $TRVand+0.1%CBRE Group $CBRE-0.9%.

I'm sure by the criteria given, one could track down other companies outside the index that might be good choices by this metric. As an illustration, however, I think this list will serve.

What about you? Do you believe in any of the listed options?

If you enjoy my articles and posts, feel free to throw a follow. Thanks! 🔥

Disclaimer: This is in no way an investment recommendation. This is purely my summary and analysis based on data from the internet and a few other analyses. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.

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