5 Top Mid-Cap Stocks Set To Gain On Earnings Next Week

Wall Street had a dream run in 2019 wherein all three major stock indexes, predominantly comprising large-cap stocks, witnessed best yearly performances in six years. Aside from these three large-cap centric indexes, the S&P 400 Mid Cap Index (SP400) also rallied 24.2% in 2019 and 2.6% in fourth-quarter 2019. In fact, investment in mid-cap stocks is recognized as a good portfolio diversification strategy. These stocks combine attractive attributes of both small and large-cap stocks.

Notably, the fourth-quarter earnings trends are showing steady improvement. Although corporate earnings growth was negative year over year in the first three quarters of last year, fourth-quarter results are faring better than initially anticipated. Below we will discuss how the reporting cycle is faring and present five top-ranked mid-cap stocks that are poised to beat earnings estimates next week.

Fourth-Quarter Earnings Results Improving  

Fourth-quarter 2019 earnings results are improving gradually. However, overall earnings are still expected to decline. As of Feb 5, 266 S&P 500 members reported fourth-quarter earnings results. Total earnings of these companies are up 0.4% from the same period last year on 3% higher revenues. Of the total, 70.7% surpassed EPS estimates while 67.3% outpaced revenue estimates.

Overall, fourth-quarter 2019 earnings for the S&P 500 Index were projected to be down 0.2% year over year on 4.2% higher revenues. This suggests a significant improvement from earnings decline of 3.2% year over year on 3.5% higher revenues, projected at the beginning of the reporting cycle. 

Fourth-Quarter at a Glance

The final three months of last year were quite promising as the U.S.-China trade war finally showed signs of shimmering down and strong economic data boosted investors’ sentiments. Moreover, Fed’s timely intervention and accommodative monetary policy helped the economy, especially the sagging U.S. housing market to recover with a low mortgage rate.

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