3 Stocks To Buy And 3 To Sell Before Earnings

For the first time in perhaps ever, we are in the middle of an earnings season where there’s tremendous uncertainty from an unknown phenomenon. This makes it terribly difficult for anyone to guess at what could happen in the future.

The way the virus affects an industry will completely change the performance and direction of constituent companies in the near to medium term. This means that the industry to which a company belongs will play an outsized role in how it does this earnings season.

Individual strengths and weaknesses play a secondary role although, of course, they are important too. Take a stock like Apple (AAPL - Free Report) for example, which has huge cash flow and a solid balance sheet. When you see how consistently estimates have moved up over the last 90 days, you know that they’re not just related to the way it has capitalized on the work from home and entertain at home trends. It’s also because of its huge installed base and steady introduction of new offerings that attract the most affluent and then makes it hard for them to move away. This competitive moat sets Apple apart.

But stock picking isn’t about a bunch of stocks, however great they might be. It’s more about getting in the game at the right time and then getting out at the right time. With earnings season gathering steam this week, here are some stocks you can profitably buy and sell before the announcement-

Lithia Motors, Inc. (LAD - Free Report)

Lithia Motors is one of the leading U.S. automotive retailers of new and used vehicles offering 28 vehicle brands across 181 stores in 18 states of the United States and Lithia.com and DCHauto.com websites. Top brands on sold across its stores and platforms include Chrysler, General Motors, Toyota, Subaru, Honda, Acura, Ford, BMW, MINI, Nissan, and Hyundai. It also offers tailored service through its nationwide network.

Why I like this company-

As I said above, the industry plays a key role in this earnings season. Lithia belongs to the Automotive - Retail and Whole Sale industry, which is in the top 2% of 250+ Zacks-classified industries. The segment is seeing the benefits of the prolonged lockdown that restricted movement. So as soon as the lockdown was lifted, people wanted options that could help them move around safely, and take road trips when possible. And what could be safer than your own transport?

The next consideration is its Zacks Rank #1 (Strong Buy rating), which is a proprietary methodology identifying winning stocks. When it’s paired with a VGM Score of A, you know that there’s something specifically great about the company as well.

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