5 Top Must-Buy Stocks Set to Beat on Q1 Earnings This Week

The first-quarter 2020 earnings season has been set in full motion. However, corporate earnings are expected to suffer significantly on account of the coronavirus outbreak that spread like wildfire across the United States and all over the world in the second half of the first quarter.

Global economic activities came almost to a standstill in March as either partial or full lockdowns were imposed. In the absence of any vaccine or line of treatment, enforcing of social distancing was the only option to curb the spread of the deadly virus.

Despite the coronavirus-induced economic disaster and stock market turmoil, five stocks with a favorable Zacks Rank are set to beat first-quarter earnings estimates this week.

Disappointing Economic Data in Q1

Several disappointing data revealed how badly the U.S. economy was hurt in the first quarter due to lockdowns, both domestic and international. In March, unemployment soared to 10 million and retail sales plunged by 8.7%, marking the highest ever monthly decline. Industrial production slipped 5.4%, the largest decline since 1946 and the manufacturing sector was down 6.3%. The ISM Manufacturing index contracted and the services index witnessed a sharp decline.

Moreover, U.S. home-building activity collapsed in March with housing starts plunging 22.3%. This was the worst monthly decline since the 1980s. Building permits declined 6.8% and consumer confidence witnessed a stiff decline.

The 11-year long historic bull run of Wall Street came to end on early March with all the three major stock indexes entering the bear market. In fact, several corporate giants warned about stiff business decline and withdrew their previously issued rosy outlook for 2020.

As of Apr 17, 47 S&P 500 members reported first-quarter 2020 earnings results. Total earnings of these companies are down 31.1% from the same period last year on 2.9% higher revenues. Of the total, 68.1% surpassed EPS estimates and an equivalent proportion outpaced revenue estimates. Overall, first-quarter earnings for the S&P 500 Index were projected to be down 14.1% year over year on 1.2% higher revenues. (Read More: Is the Market Ahead of Itself?)

Our Top Picks

We have narrowed down our search to five stocks. Each of these stocks has a Zacks Rank #2 (Buy) and a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are expected to soar after earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The chart below shows the price performance of our five picks in the last quarter.

Netflix Inc (NASDAQ:NFLX). NFLX is a provider of Internet television (streaming services) and DVD-rental services. It streams movies, television shows and documentaries across a wide variety of genres and languages. The company has an Earnings ESP of +2.38%.

Netflix has an expected earnings growth rate of 45.8% for the current year. The Zacks Consensus Estimate for the current year earnings has improved 1% over the last 30 days. It has a trailing four-quarter positive earnings surprise of 57.6%, on average. The company is set to release earnings results on Apr 21, after the closing bell.

Silgan Holdings Inc. SLGN manufactures and sells rigid packaging for consumer goods products in North America, Europe and internationally. It operates through three segments: Metal Containers, Closures and Plastic Containers. The company has an Earnings ESP of +0.68%.

Silgan Holdings has an expected earnings growth rate of 7.4% for the current year. The Zacks Consensus Estimate for the current year earnings has improved 0.4% over the last 30 days. It has a trailing four-quarter positive earnings surprise of 2.2%, on average. The company is set to release earnings results on Apr 22, before the opening bell.

Citrix Systems Inc (NASDAQ:CTXS). CTXS is a leading provider of virtualization, networking and cloud computing solutions to more than 400,000 organizations worldwide. It offers secure digital workspace technologies which are cloud-based, and can be managed across both hybrid and multi-cloud infrastructures. The company has an Earnings ESP of +1.58%.

Citrix Systems has an expected earnings growth rate of 15.3% for next year. The Zacks Consensus Estimate for next year's earnings has improved 0.3% over the last 30 days. It has a trailing four-quarter positive earnings surprise of 6.3%, on average. The company is set to release earnings results on Apr 23, before the opening bell.

Eli Lilly and Co. LLY discovers, develops, manufactures and markets pharmaceutical products worldwide. It offers endocrinology products for diabetes, osteoporosis in postmenopausal women and men, and human growth hormone deficiency and paediatric growth conditions. The company has an Earnings ESP of +1.67%.

Eli Lilly has an expected earnings growth rate of 12.1% for the current year. It has a trailing four-quarter positive earnings surprise of 5.2%, on average. The company is set to release earnings results on Apr 23, before the opening bell.

FirstEnergy Corp. FE generates, transmits, and distributes electricity in the United States. It operates through Regulated Distribution and Regulated Transmission segments. The company has an Earnings ESP of +0.52%.

FirstEnergy has an expected earnings growth rate of 5.7% for the upcoming year. The Zacks Consensus Estimate for next year's earnings has improved 0.8% over the last 30 days. It has a trailing four-quarter positive earnings surprise of 5.5%, on average. The company is set to release earnings results on Apr 23, after the closing bell.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>