How To Invest For The 2021 Earnings Boom

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First-quarter earnings are expected to be up 19.3% year-over-year with even stronger growth later in the year.

This week, Tracey is joined by Zacks Director of Research, and earnings guru, Sheraz Mian, to talk about the first-quarter earnings season and what earnings growth is looking like for all of 2021.

Earnings to Boom in 2021

Analysts have been raising their earnings estimates heading into the first-quarter earnings season.

Earnings for the S&P 500 are now expected to be up 19.3% year-over-year with revenue up 5.3%. It is reminiscent of the big earnings gained achieved after the federal corporate tax cuts were passed in 2017.

The rest of the year is also expected to be bullish, with strong earnings growth expected, as the economy reopens after the coronavirus pandemic.

Where Should Investors Look for Opportunities?

1.  Pandemic plays have come down off their 2020 highs, including high flier Zoom Video (ZM - Free Report), which has fallen about 14% in the last month. Is it time to dive in? It’s still expensive with a forward P/E of 91.

2.  Amazon (AMZN - Free Reportwas a big winner due to its online delivery, but those shares have stalled out in the last 6 months, and are up just 0.3% during that time. But Amazon is expected to grow earnings by another 18% this year.

3.  Retailers that had to pivot quickly to online-only sales because their brick-and-mortar stores were shut, like Macy’s (M - Free Reportcould be post-pandemic winners as consumers yearn for the days of walking through the aisles and browsing.

4.  Additionally, some of the mall REITs could still see further upside even though they’ve soared in 2021 on recovery hopes. The Macerich Company (MAC - Free Reportis up 31% year-to-date but still sports a forward P/E of just 6.

5.  Energy has had a huge run in 2021, but the earnings estimates have doubled over the last 3 months for the group. Sheraz believes every investor should have some energy exposure. Chevron (CVX - Free Reporthas fallen over 5% in the last 5 sessions and pays a dividend-yielding 5%.

In full disclosure, Tracey owns shares of AMZN in her personal portfolio.

Disclaimer: Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the  more

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