Earnings season is an exciting time for investors as it is during these periods
that fundamentally superior stocks rack up their biggest gains. What I look for
every earnings season is stocks with not only the highest year-over-year
earnings and sales growth, but also the ones with the most aggressive upward
earnings report revisions. If analysts are scrambling to lift their estimates of
how high a companys profits will actually be, its a good sign that the company
will post earnings figures in excess of analysts predictions. And when it comes
to earnings reports, investors like to be pleasantly surprised. So Im going to
preview five of the best stocks picks on the market for this earnings season.
They have the most aggressive upward earnings revisions and are fundamentally
superior plays. Im also going to give you the names of five earnings dogs that
are likely to completely miss the mark and that should be avoided at all costs
this earnings season. 5 Earnings Season Winners Western Refining Inc. (WNR) Oil
stocks have really taken off in the past few weeks with the events in Libya and
other countries in the Middle East. Economists are getting worried about global
supply shocks, but investors are getting excited about the huge profits that can
be reaped in oil and gas plays. As we near earnings season, I would advise you
to begin picking up some oil and gas plays as these companies are receiving some
of the most aggressive upward earnings revisions. Oil companies are benefiting
from the rising price of oil, and the extra profits they book on these sales
will be reflected in their results for the current quarter. One of these
companies is Western Refining Inc. (NYSE: WNR ). WNR is an independent crude oil
refiner that operates in the western and southern parts of the United States.
The company owns 150 service stations and also distributes oil on the wholesale
level to construction, manufacturing and agricultural companies. These
industries are really starting to pick up, and with the increased business the
company will receive from these industries, Western Refining will likely
increase its profits substantially. For the current quarter, analysts are
expecting WNR to post earnings of 27 cents per share, up significantly from its
35-cent-per-share loss last year. In fact, just two months ago, analysts had
been expecting the company to post earnings of just 3 cents per share,
indicating that analysts also think WNR will benefit from the windfall in oil
prices. This is a very strong play going into earnings season. WNR scheduled to
report earnings on May 5. Advanced Photonix Inc. (API) Advanced Photonix Inc.
(AMEX: API ) is a stock thats really starting to show some potential as we near
its earnings announcement. I just recently started following this stock, but Im
already very excited for its prospects. API is a thinly traded technology
company that makes optoelectronic devices, which are machines that can source,
detect and control light. These devices are used in light-emitting diodes
(LEDs), fiber optic cables and photovoltaic (solar) cells. The applications for
these gadgets are numerous and are in some of the hottest industries on the
market right now. Thats why earnings expectations for API have improved so
dramatically over the past year. The company posted a loss in each of the past
four quarters, but this quarter analysts are expecting it to post break-even
results. While this may not sound so great, breaking even is a triumph for
companies operating in next-generation industries, and would be the first step
for this company to posting results well in the black. Analysts continue to
revise their estimates higher on this stock, and API could very well surprise
investors and post positive results when it announces. This is a great tech
stock, and I would definitely recommend adding it to your portfolio before its
earnings report. API is scheduled to report earnings on June 27. Neurocrine
Biosciences Inc. (NBIX) The next top stock on my radar for the coming earnings
season is expected to post a 125% year-over-year increase in earnings.
Neurocrine Biosciences Inc. (NASDAQ: NBIX ) is a biotechnology company that
studies and develops treatments for neurological and endocrine-related diseases
like depression and diabetes. The company has several products in clinical
development, including ones for mood disorders and cardiovascular disease. The
important thing to remember about biotechnology companies is that they tend to
pop when positive news is released about one of their drugs, e.g., if the
government gives them approval for their treatments. Seeing as this company has
several drug therapies in the queue, there are quite a few opportunities for us
to get a bounce on this stock. Analysts are expecting earnings of 5 cents per
share for the current quarter and even greater earnings in the quarters ahead.
This stock could be on the cusp of a great run-up, so if youre going to buy
shares, do so now before the crowd catches wind of this opportunity. NBIX is
scheduled to report earnings on April 25. LSB Industries Inc. (LXU) LSB
Industries Inc. (NYSE: LXU ) is another one of the companies thats jumping onto
my radar this earnings season. The company makes products primarily for two
industries: chemicals and climate control. For the chemicals industry, it makes
various chemical solutions that it sells to agricultural companies, miners and
electronics manufacturers. For the climate control industry, it makes various
heating, ventilation and HVAC products. The company has been around for a while,
but it continues to surprise investors. Just last quarter it posted a 182%
earnings surprise and, since that time, analysts have been aggressively revising
their estimates higher. Experts are now predicting earnings of 59 cents per
share when the company announces results for the first quarter, up from their
previous estimate of 37 cents per share just three months ago. Year-over-year,
this would represent a nearly 750% increase! This stock really packs a punch and
would be a great addition to any portfolio this earnings season. LXU is
scheduled to report earnings on May 2. CVR Energy Inc. (CVI) When you invest in
stocks, it is very important to stay diversified. That is why I always recommend
that you pick stocks from a variety of sectors and that you not be overweighted
in one industry. At the same time, however, it is important to follow the
growth, and this is especially true during earnings season. Well, this earnings
season, much of the growth will be in oil and gas stocks. These companies are
likely going to post the biggest earnings surprises due to the recent
geopolitical crises that have sent up the price of oil. With that in mind, Ive
got another oil and gas recommendation for you. CVR Energy Inc. (NYSE: CVI )
keeps popping up on my screens. This company, like WNR, refines and sells
transportation fuels in the United States. It operates primarily in the central
part of the country, and also produces and sells nitrogen fertilizer for
agriculture. The United States is increasingly exploring its energy
independence, and companies like CVR are going to benefit from an increased
reliance on domestic oil. Also, with the disastrous effects of floods and
droughts throughout the world, countries will be looking to the United States to
make up for shortfalls in the agricultural system. This will also benefit CVR as
more agricultural companies buy its fertilizer. In January, analysts had been
predicting earnings of 22 cents per share for this company. Today, theyre saying
this company will post earnings of 64 cents per share. This is an incredible
increase, and even still, analysts keep moving their targets higher. CVR could
post a substantially higher number, and this would give investors a very
welcomed surprise this earnings season. CVI is scheduled to report earnings on
May 3. 5 Earnings Season Dogs Tier Technologies Inc. (TIER) It seems Tier
Technologies Inc. (NASDAQ: TIER ) is in a race to the bottom. Just last year, I
rated it a B (buy) on my Portfolio Grader , but now it gets a solid F (strong
sell). Its earnings expectations are terrible, and investors are running away
from this stock like theres no tomorrow. Expectations are for a 7-cent-per-share
loss in the current quarter, down from a prior projection of a 1-cent-per-share
loss, and this company could very well even miss that estimate given that it has
missed estimates, sometimes by triple-digit percentages, in each of the past
four quarters. TIER is scheduled to report earnings on May 11. BioMarin
Pharmaceutical Inc. (BMRN) BioMarin Pharmaceutical Inc. (NASDAQ: BMRN ) makes
outstanding products that help thousands of people suffering from rare diseases,
but just because the company is doing good doesnt mean that its financials are
faring well. The company is expected to post a loss of 10 cents per share in the
current quarter. This is down from previous estimates by analysts of $0 per
share. Looking back over past quarters, this companys performance has been
somewhere erratic, so I would recommend that you stay away from this stock until
it stabilizes. BMRN is scheduled to report earnings on April 28. Limelight
Networks Inc. (LLNW) Limelight Networks Inc. (NASDAQ: LLNW ) delivers content
for emerging media companies in the United States, Europe and Asia. The company
is on the cutting edge of a new industry, but it still hasnt figured out how to
make an old-fashioned profit. For the current quarter, analysts are expecting a
5-cent-per-share loss, and estimates keep getting revised downward. I say that
you should stay clear of this stock for the time being. LLNW is scheduled to
report earnings on May 5. MarineMax Inc. (HZO) MarineMax Inc. (NYSE: HZO ) is a
stock that I wish were doing better because it would mean that more people were
spending time recreational boating. The companys products range from cruisers to
yachts to fishing boats, but if you want to be able to afford one of its boats
for yourself one day, I would recommend that you find another stock to invest
in. Analysts are expecting the company to report a 10-cent-per-share loss in the
current quarter, and the stock gets a solid F on Portfolio Grader. HZO is
scheduled to report earnings on April 25. Cogdell Spencer Inc. (CSA) Unlike the
rest of the stocks on this earnings dogs list, Cogdell Spencer Inc. (NYSE: CSA )
is actually expected to post a profit in the current quarter. The reason it
finds itself on this list is that analysts have been revising their profit
estimates downward. This is a big red flag to me as it suggests that the company
will post a negative earnings surprise when it reports. Cogdell is a real estate
investment company, and I think the housing industry is still too volatile to
invest in real estate stocks at this time. CSA is scheduled to report earnings
on May 5. If you have any questions about whether your stock picks have what it
takes to post solid numbers in the quarter ahead, run them through Portfolio
Grader and make sure you check to see if analysts are revising estimates higher.
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