- (0:30) – Second Quarter Earnings Season: Covid-19 Impact
- (6:50) – Expectations Heading Into 2021
- (11:30) – How Can Investors Navigate This Over Valued Market?
- (18:30) – Is It A Good Time To Invest In The Finance Industry?
- (26:15) – Small Cap Stocks Slump In Performance
- (29:20) – Episode Roundup: FDX, JPM, BAC, NKE, AMZN, GOOGL, MSFT, FB
- [email protected]
Welcome to Episode #231 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey’s joined by Zacks Director of Research, Sheraz Mian, to discuss the second quarter earnings season.
Several months ago, Sheraz appeared on the podcast to discuss the first quarter earnings season. At the time, it seemed that Q1 would be the most important earnings season in a decade. But that was wrong.
It will be the second quarter, which was during the height of the pandemic in the United States, which will see the most impacts.
S&P 500 earnings are expected to crash 44% in the quarter with the S&P 600, the small caps, getting crushed, with an earnings decline of over 85% expected.
But with the recovery underway, the second quarter should be the bottom of the earnings decline.
The Quarter of Uncertainty
As we’ve seen from both Nike NKE and FedEx FDX, the analysts have no way of knowing what the results are going to be.
For Nike, it was a big miss which was a surprise as it was just the second miss in the last 8 years for the iconic shoe and apparel company.
But for FedEx, it was a big beat fueled by the surge in online shopping which resulted in more deliveries.
What other stocks should investors be watching this earnings season?
3 Stocks for this Earnings Season
1. Microsoft MSFT is hitting new highs going into this earnings report. It, along with the FAANG stocks, are considered the “winners” during the pandemic. Microsoft is now trading with a forward P/E of just 34. Should investors be buying the big cap winners?
2. JPMorgan Chase JPM is one of the premier banks. Earnings are expected to decline 52.5% this year. Are the analysts too bearish on the banks going into this report?
3. Bank of America BAC is one of the other big cap banks that investors should watch. It’s trading with a forward P/E of just 16 and is still paying a dividend, yielding 3%. Are the banks hidden gems in 2020 or a value trap?
What else should you know about what to expect this earnings season?
Listen to this week’s podcast to find out.
[In full disclosure, Tracey owns shares of MSFT, FB, AMZN, GOOGL in her personal portfolio.]
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