After an impressive run last year, U.S. equity markets saw a choppy and volatile start to 2015. While a strengthening U.S. economy, rising hopes on European stimulus and dovish comments by the Federal Reserve are driving stocks higher, the persistent decline in oil prices, instability in Greece and global growth uncertainty continue to weigh on the returns.

More importantly, weak earnings growth expectations for Q4 are compelling investors to turn cautious. With Alcoa (AA - Analyst Report) earnings set to release after the market close today and most banking companies releasing results this week, the earnings season will now take center stage. According to the Zacks Earnings Trend, Q4 earnings estimates for the S&P 500 companies have been moving south since the start of the quarter.

Earnings are expected to be up only 1.2%, down substantially from 9.6% growth in early October and 6.9% reported in Q3. Revenues will likely be down 0.5% on modestly higher net margins. Investors should note that the magnitude of negative revisions for Q4 is the highest among recent quarters with energy being the biggest drag, followed by materials, consumer staples and industrial products. The enormous earnings estimate decline can be traced back to the unprecedented decline in oil prices in the past few months.

However, four sectors still expect double-digit earnings growth in Q4 and are likely to emerge as big winners this earnings season. These include Medical, Transportation, Business Services and Utilities. It would be a good idea to zero in on the best stocks of these sectors amid a high level of uncertainty. These stocks will likely lead higher in the days to come.

How to Choose Stocks?

Earnings beat will definitely inspire investors’ confidence and propel the price of these sector stocks higher. Picking the star performers would be if we go by our proprietary methodology that selects stocks with a combination of a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Zacks Earnings ESP.
 
Earnings ESP is our proprietary methodology for identifying stocks that have the maximum chance to surprise with their upcoming earnings announcements. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of positive earnings surprise is as high as 70%.

Below, we have highlighted four stocks that will likely deliver an earnings beat when their earnings are released in the coming weeks and would drive the share price higher, resulting in above-market returns.

4 Stock Picks

A top pick is BioTelemetry Inc. (BEAT - Snapshot Report), which carries a Zacks Rank #1 and has an earnings ESP of +100%. The stock falls under the medical service industry that has a solid Zack Rank in the top 21% and has seen rising earnings estimate of 2 cents to 5 cents for the fourth quarter over the past 30 days. It also delivered positive earnings surprises in the last four quarters, with an average beat of 208.33%.

Based in Malvern, PA, BioTelemetry formerly known as CardioNet Inc. is the leading wireless medical technology company focusing on the delivery of health information to improve quality of life and reduce cost of care. The company currently provides cardiac monitoring services, cardiac monitoring device manufacturing, and centralized cardiac core laboratory services.

The company is scheduled to report its results after the market close on Feb 25.

Another intriguing stock could be Allegiant Travel Company (ALGT - Snapshot Report) from the airline industry. The stock, with a top Zacks Rank #1 and industry Zacks Rank in the top 2%, has an earnings ESP of +6.87%. The Zacks Consensus Estimate for the fourth quarter 2014 is $1.31, up 38.94% from the year-ago quarter and 3.1% over the past 30 days. The company delivered positive earnings surprises over the last four quarters, with an average beat of 2.14%.

Based in Las Vegas, Allegiant Travel is a leisure travel company focusing on linking travelers in small cities to world-class leisure destinations such as Phoenix, AZ., and the Florida cities of Fort Lauderdale, Orlando and Tampa/St. Petersburg. Through its subsidiary, Allegiant Air, the company operates a low-cost, high-efficiency, all-jet passenger airline offering air travel both on a stand-alone basis and in combination with with hotel rooms, rental cars and other travel-related services.

The company is slated to release its earnings after the market close on Jan 28.

TubeMogul Inc. (TUBE - Snapshot Report), carrying a Zacks Rank #2 and a solid industry Rank in the top 34%, could also be a great pick this earnings season. The company has an earnings ESP of +37.50% and delivered massive positive earnings surprise of 83.78% in the third quarter as well. For the fourth quarter, the stock in the advertising and marketing service industry has seen solid earnings estimate revision to a loss of 16 cents from a loss of 20 cents over the past 30 days and from a loss of 34 cents over the past 60 days.

Based in Emeryville, CA, TubeMogul is leading enterprise software platform for video advertising that puts brands and agencies in control though its cloud-based platform. By reducing complexity, improving transparency and leveraging real-time data, its platform enables advertisers to gain greater control over their spending on video advertising and achieve their brand advertising objectives.

The company is expected to report on Feb 12.

A look to The Laclede Group Inc. (LG - Snapshot Report) in the utilities sector this earnings season could also be a great idea. The stock, with a Zacks Rank #3 and industry Rank in the top 31%, has an earnings ESP of +25.66%. The Zacks Consensus Estimate for the fourth quarter of 2014 is $1.13, up 1.62% from the year-ago quarter. The company delivered positive earnings surprises in the last four quarters, with an average beat of 16.41%.

Based in St. Louis, MO, The Laclede Group is a public utility engaged in the retail distribution and transportation of natural gas to more than 1.5 million residential, commercial, and industrial customers across Missouri and Alabama.

The company is scheduled to report its results before the market opens on Feb 3.

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