The average year-over-year growth estimate for the fourth quarter is expected to be the third largest increase in over ten years. That means investors should consider growth stocks in sectors with the highest growth potential. Three great examples are as Ryder System, Inc. (NYSE:R), Greif Inc. (NYSE:GEF), and Westlake Chemical Corporation (NYSE:WLK).A catalyst that I believe will positively impact stock prices in the fourth quarter 2021 is Q3 earning season which kicks off this week. This year’s first and second quarter finished with the average year-over-year earnings growth rates for the S&P 500 of 52.3% and 90.9%. While I don't expect that same kind of growth this quarter, growth is still expected to be strong.
Right now, according to FactSet, the estimated year-over-year earnings growth rate for the third quarter is 27.6%. This would be the third-highest earnings growth rate since 2010. Considering that the actual figure has historically been a little higher than the estimate, the average growth could be as high as 35%, making it the third consecutive quarter of year-over-year earnings growth above 30%.
If we dig deeper into the sectors with the highest growth estimates, Materials and Industrials are way ahead. That's why investors should consider stocks in these sectors, such as Ryder System, Inc. (R), Greif Inc. (GEF), and Westlake Chemical Corporation (WLK) that have high estimated earnings growth for the third quarter.