Stock Picks to Buy, Best Earnings Season Investing Tips: BofA – Business Insider

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  • Companies that consistently beat expectations on Wall Street tend to get handsomely rewarded. 
  • Bank of America says the companies below stand a strong chance of doing just that this fall.
  • They’re all “Buy” rated, and have momentum from beating estimates in the second quarter.

In the stock market, doing well isn’t good enough. Doing better than everyone expects is the name of the game.

That can set off a cycle in which analysts and companies carefully manage expectations, but the truth is that investors want to find companies that inspire them to expect a lot, and they want to see those companies beat whatever Wall Street expects from them.

And no matter how much media attention is paid to factors like interest rates, meme stocks, and other measures of the market’s mood, investors still pay attention to how much money companies earn

Bank of America says that’s going to be important as markets move into a new phase after benchmark indexes doubled in the last year and a half. 

“High Quality stocks have led both the index and Low Quality peers in 100% of Late Cycle regimes since 1990, where ROC and FCF ROA have been top factors,” wrote Equity and Quantitative Strategist Jill Carey Hall in a recent note to clients.

High quality companies are defined in part by strong and stable earnings, and investors will get their latest chance to look under the hoods of those companies — and compare them against both Wall Street’s expectations and their own — over the coming weeks.

Carey Hall says the stocks below may be among the best opportunities in the small- and mid-cap spaces for the upcoming earnings period. These companies all beat Wall Street’s expectations for both earnings and sales in the second quarter. They are all “Buy” rated by Bank of America’s analysts, and the firm’s estimates for this period are above the analyst consensus.

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