With an uncertain market cycle likely to narrow the list of winners in the third quarter, investors who don’t mind speculating may want to consider these stocks to buy ahead of Q3 earnings. To be sure, the entire concept is wildly risky. You just never know what might happen.
At the same time, if you gamble correctly, you could see significant gains. After all, no one else knows what management teams of releasing companies will disclose. Understandably, this is one of the reasons why regulatory agencies crack down hard on insider trading. When you’re dealing with stocks to buy ahead of Q3 earnings (or any three-month period), even the smallest advantage can lead to enormous returns.
Given the possible volatility of attempting to decipher viable stock picks on the unknown, I’m going to give myself a cushion. Each of the below ideas features long-term relevancies so that if the disclosures turn out to be duds, they should still be good buys.
On that note, below are stocks to buy ahead of Q3 earnings.
Northrop Grumman (NOC)
As a multinational aerospace and defense technology firm, Northrop Grumman (NYSE:NOC) is basically a member of the military-industrial complex. Therefore, it’s a controversial idea for stock picks no matter what the season or context. Nevertheless, given the geopolitical flashpoints recently, Northrop appears incredibly relevant. Subsequently, I think it’s one of the stocks to buy ahead of Q3 earnings.
Per Kiplinger, Northrop will release its financial results on Thursday, Oct. 26. Analysts will be looking for earnings per share to hit $5.81. In the year-ago Q3, Northrop posted EPS of $5.89. For the defense contractor, one of the key highlights is revenue expansion. In Q2 2023, the company rang up sales of almost $9.6 billion, up 8.8% on a year-over-year basis.
Looking ahead, investors will likely look for relevance associated with the military conflicts around the world. In light of rapidly changing circumstances, I believe analysts’ buy rating target of $497.69 – which implies less than 3% upside – may be too low.
Colgate-Palmolive (CL)
One of the biggest consumer goods firms, Colgate-Palmolive (NYSE:CL) arguably represents an easy case for stocks to buy ahead of Q3 earnings. Manufacturing essential products such as toothpaste, Colgate should be relatively insulated if an economic downturn materializes. While consumers can cut back on discretionary items, they’re going to do their best to keep their spending on the essentials as stable as possible.
Per Kiplinger, Colgate will release earnings on Friday, Oct. 27. Analysts anticipate that the company will generate EPS of 80 cents. In Q3 of last year, Colgate posted EPS of 74 cents. Financially, the business benefits from a steady expansion of the top line, just as expected. Also, its gross margin is stable compared to trends in 2022. That indicates robust pricing power, an important attribute ahead of a possible downcycle. Presently, analysts rate CL a moderate buy with an $80.57 price target, implying 10% growth. It should be a reasonable idea for stocks to buy ahead of Q3 earnings.
Exxon Mobil (XOM)
On the surface, Exxon Mobil (NYSE:XOM) seems an increasingly irrelevant enterprise. After all, it’s a hydrocarbon energy giant while the world pushes for clean and renewable solutions. However, the idea that electric vehicles will soon take over global roadways will probably need to be shelved. Thanks to a combination of economic pressures and geopolitical tensions, hydrocarbons will probably remain relevant for years to come.
Basically, folks can’t afford to make the transition to EVs. As well, an infrastructure overhaul is necessary for such an ambition to be feasible. In the meantime, investors looking to profit off of stocks to buy ahead of Q3 earnings should note that Exxon will release its financial results on Friday. Analysts will be looking for the company to post EPS of $2.37. In Q2 of the previous year, Exxon posted $4.68.
To be sure, the hydrocarbon sector has been disappointing up until recently when coordinated oil production cuts boosted prices. With our adversaries unlikely to do us any favors, XOM could be one of the intriguing stock picks.
PG&E (PCG)
If you’re going to invest in PG&E (NYSE:PCG) as your choice for stocks to buy ahead of Q3 earnings, you might want to keep that info to yourself. Unfortunately, the company has aroused significant controversy in recent years. One of them led to a scathing op-ed by The Bulletin. Despite the bad taste that the utility giant may leave, it’s also cynically one of the stock picks to consider.
Don’t get me wrong: I’m not here to justify any of PG&E’s questionable actions, past, present, and (presumably) future. However, it can’t be ignored that utilities – especially those located in economic powerhouse states like California – can generate consistent profits. And during economic downcycles, residences and businesses have little choice but to pay up. It’s the captive audience – I mean, capitalism – at work.
PG&E will release earnings on Thursday. Analysts anticipate that the company will generate EPS of 30 cents. In the year-ago Q3, the utility posted 21 cents. Analysts consider shares a strong buy with an $18.82 target (against Friday’s close of $16.02), making it a reasonable idea.
Hershey (HSY)
A multinational confectionery specialist, Hershey (NYSE:HSY) is one of the largest chocolate manufacturers in the world. It also makes other products, including cookies and cakes, as well as selling beverages like milkshakes. Fundamentally, I believe HSY could benefit from the trade-down effect. Consumers may look away from food and beverage service retailers to the grocery aisle to get their treats amid pressures.
However, if you’re looking for stocks to buy ahead of Q3 earnings, Hershey admittedly presents high risks. Since the January opener, shares lost almost 16% of their equity value. However, it’s also possible that HSY has been considerably de-risked because of the red ink. For example, shares trade at a trailing earnings multiple of 22x. In Q1 of this year, this metric stood at 30.9x.
Per Kiplinger, Hershey will release its financial results on Thursday. Analysts anticipate that the company will post EPS of $2.46. In Q3 of last year, it posted EPS of $1.94. Also, market experts rate HSY a moderate buy with a $29 upside forecast.
Newmont (NEM)
Another risky proposition for stock picks, Newmont (NYSE:NEM) is a gold-mining enterprise. Per its public profile, it’s the world’s largest gold-mining corporation. As well, the company extracts other valuable commodities, including copper, silver, zinc, and lead. Of course, one of the main headwinds against NEM is the Federal Reserve. Essentially, a hawkish monetary policy doesn’t bode well for precious metals.
At the same time, gold and silver represent assets with a long history of intrinsic value. As a result, these metals may benefit from the fear trade. Also, because of their insulation and conductivity properties (among other attributes), these metals will be relevant for the technologies of tomorrow. Given the fiercely competitive geopolitical space, NEM may benefit.
On Thursday, the mining stalwart will disclose its financial results. Covering analysts will be looking for an EPS of 43 cents. In Q3 of last year, Newmont posted 27 cents. Also, market experts believe shares will hit $51.25, implying 32% growth. Possibly, that makes NEM one of the stocks to buy ahead of Q3 earnings.
Amazon (AMZN)
When Amazon (NASDAQ:AMZN) releases its earnings report on Thursday, it will command Wall Street’s undivided attention. Per Kiplinger, the company reported blowout Q2 earnings in August. At the time, it posted its biggest bottom-line beat since the final quarter of 2020. The company also benefited from double-digit sales growth.
Looking ahead to a few days from now, analysts anticipate that the e-commerce and tech giant will report EPS of 55 cents on revenue of $134.2 billion. That’s up 96.4% year over year and 5.6% year over year, respectively. According to UBS’ Lloyd Walmsley, while higher energy prices and seasonal hiring might weigh on margins, retail margins overall could be in the early stages of expansion. If so, AMZN just might continue impressing the Street.
Just as well, e-commerce sales as a percentage of total sales have been steadily rising since Q2 2022. It’s quite possible that, given the still-robust labor market, this metric could march higher. That could be the confidence boost that sends AMZN northward. Finally, analysts state Amazon is a strong buy with a $175.38 target, implying over 40% upside.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.