After a huge rebound from the coronavirus crash lows in March, the stock market is testing its first serious pullback. And with Q3 earnings season on the horizon, Virtu Financial (VIRT), Quidel (QDEL), PennyMac Financial Services (PFSI), Big Lots (BIG) and 11 other stocks are expecting 107% to 1,433% earnings growth in their next quarterly report.
To make this screen, analyst earnings estimates for next quarter must be over 100%. Plus, each of these stocks to watch must have a 95 or higher Composite Rating, which means they’re outperforming 95% or more of all stocks in terms of the most important stock-picking traits.
As further evidence of their stock market leadership, Futu, Big Lots and PennyMac are all on the IBD 50 list of the best growth stocks. PennyMac is also on Sector Leaders, IBD’s most stringent screen that outperformed the S&P 500 43.4% to 8.3% from January to August.
Nearing a potential new buy zone and all-time high, PennyMac was recently featured on the IBD Breakout Stocks Index.
AlphaProTech has earned a spot on Stock Spotlight.
How To Find The Best Stocks To Buy And Watch
While certainly important, explosive earnings growth is just one factor in finding the best stocks to buy and watch. Investors should take a holistic look at each stock, paying particular attention to the three telltale signs that matter most.
Stock market history shows that the best stocks have a new product or service in high demand and are being heavily bought by institutional investors. The final factor is the stock market itself. Three out of four stocks simply follow the overall market direction, either up or down. So always analyze your own stocks in tandem with the performance of the Nasdaq, S&P 500 and Dow Jones Industrial Average.
Currently, Virtu Financial and PennyMac are in or near new buy zones, but the market is struggling to rebound from its current correction. AlphaProTech and Quidel are example of how sometimes stocks with impressive earnings growth have sold off sharply.
Like a three-legged stool, you need all three pieces — fundamentals, technicals, overall market — to be strong to create the most stable investing environment. Stay patient and disciplined. Make sure each piece of the puzzle is in place when determining the best stocks to buy and watch.
|Company||Symbol||EPS Est Cur Qtr %||EPS % Chg Last Qtr||Composite Rating|
|Alpha Pro Tech||APT||1,433||475||98|
|Futu Holdings Class A||FUTU||600||300||98|
|Atlas Air Worldwide||AAWW||532||2671||99|
|Daqo New Energy||DQ||362||262||99|
|Virtu Financial Class A||VIRT||314||981||99|
|Take-Two Interactive Software||TTWO||125||88||96|
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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