4 Stocks With Big Surprises On Earnings In 2015

The market has been fairly wild in 2015, setting pulses racing of even the most steady investors. Pressured by multi-directional pressures, the major indices set off alarm bells plenty of times throughout the course of the year. However, in spite of all the volatility, markets held opportunities for the investor who played it smart.

The Year from a Broader View

2015 was marked by anxieties over a Fed rate hike, plunging crude prices and continued strength in the dollar. While the slide in oil prices wreaked havoc on energy stocks and affected junk bonds, the surge in the dollar had an adverse impact on U.S. multinationals’ overseas sales.

Further, global macroeconomic headwinds stemming from the Greek debt crisis and bursting of the Chinese equity bubble added to the market volatility.

However, amid such turmoil, the U.S. economy was comparatively resilient. Though the economy didn’t register a breakout year, it posted strong gains to demonstrate its capability to deal with an interest rate hike. Notably, speculations surrounding the Fed’s interest rate was put to rest with a 0.25%-0.50% increase from the near-zero levels.

Thus, the Fed’s announcement of the hike portrays how the U.S. economy has progressively recovered since the 2008 crisis. The economy seems to be heading in the right direction but is not entirely out of the woods, as is evident from the other prevailing issues.

Though we are no longer anxious about the lift-off, however, it remains to be seen how fast the Fed will tighten policy, though the central bank has repeatedly stated a commitment to remain gradual in its approach.

Earnings Power

In the midst of such uncertainty, earnings performance has emerged as a decisive factor behind a stock’s performance. Conjectures regarding earnings beat or miss have become a primary concern for investors that can either cheer or displease to the point of a hasty sell-off. Thus, in the world of finance, earnings is both literally and figuratively ‘the bottom line.’

However, earnings growth has been somewhat weak in recent quarters. In fact, earnings growth was negative for the S&P 500 index in each of the last two earnings seasons. The picture isn’t expected to improve in the fourth quarter earnings season either, with current fourth quarter growth expectations the weakest of any other recent period at the comparable stage.

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