The many pundits who were extremely bearish on stocks in May and June predicted that the second-quarter earnings season would be a total disaster. In fact, the earnings season, boosted by the resilience of many middle-class and affluent US consumers, has been quite good. 75% of S&P500 companies that reported results through Aug. 5 beat analysts’ average earnings per share, or EPS, estimates. Given that the street remains overly pessimistic about the majority of companies significantly beating earnings expectations, many of these companies’ stocks are excellent stocks for investors to buy.
Of course, it also makes sense to accumulate the shares of companies whose sectors are driven by powerful and positive catalysts. Accordingly, I have sought to include stocks in the travel, automotive, retail, renewable energy, restaurant and healthcare sectors in this article. All of these stocks to buy are very well positioned to easily outperform the market in the months and quarters ahead.
Stocks to buy: Ford (F)
On July 27, Ford (NYSE:F) reported earnings per share, excluding certain items, of 68 cents versus an average analyst outlook of 44 cents. The company’s automotive revenue jumped 57% year-over-year (YOY) to $37.9 billion, well beating the average outlook of $35.2 billion.
Ford’s prosperity continued in the current quarter as it reported that its sales last month soared nearly 37% from the same period a year earlier. Electric vehicle (EV) and SUV sales have paved the way for the automaker.
Driven by this demand, Ford should continue to deliver very strong financial results in the future. And as it continues to introduce new electric vehicles, it stands to benefit immensely. Meanwhile, the forward price-to-earnings (P/E) ratio of F stock is only 8.5x, giving the stock plenty of room to progress much further.
Manufacturer of components for solar projects, Phase (NASDAQ:ENPH) reported Q2 EPS of $1.07, well above the average analyst estimate. The company’s revenue climbed 68% year-over-year to $530 million. compared to the average analyst estimate of $505 million.
Enphase’s third-quarter revenue forecast also beat expectations, coming in at between $590 million and $630 million, versus an average analyst forecast of $550 million.
Already largely benefiting from the huge demand for solar power in Europe, Enphase noted that its sales in the continent jumped 69% in Q2 compared to Q1. European homeowners “want self-consumption as the region not only faces rising energy prices, but also growing demand for home electrification fueled by electric vehicles and natural gas shortages,” explained Phase.
With the recently enacted Inflation Reduction Act enacting tax credits for solar projects in the United States for the next decade, Enphase’s US business is also set to experience a tremendous boost.
Stock to buy: Marriott (MAR)
Marriott (NASDAQ:TUE) reported Q2 EPS of $1.80, well above the average analyst outlook of $1.57. The hotel chain’s revenue soared 70% year-on-year to $5.34 billion, versus an average analyst estimate of $960 million.
Company CEO Anthony Capuano said in a statement: “Looking forward, we are optimistic about our financial outlook and strong cash generation and expect to return over $2.2 billion to shareholders. in the form of dividends and share buybacks in 2022”.
Capuano added that the company’s revenue per available room, or RevPAR, had returned to pre-pandemic levels in all regions of the world except Asia-Pacific.
“Occupancy on Fridays and Saturdays was fully recovered and occupancy on Thursdays and Sundays, commonly referred to as shoulder nights, was close to 2019 levels,” the CEO reported.
With pent-up travel demand likely to continue at least through the end of the year, MAR stock should do very well for at least the next few months.
General Electric (GE)
General Electric (NYSE:GE) reported Q2 EPS of 78 cents, truly crushing the average analyst outlook of 42 cents. Its revenue rose only 1.6% year-on-year to $18.6 billion, but analysts’ average outlook was $17.9 billion.
Unsurprisingly, the company’s aerospace unit was the main reason for the conglomerate’s profit overshoot. The unit’s profit soared to $1.1 billion from just $176 million in the same period a year earlier, while the unit’s orders soared 26% year-on-year to reach $6.9 billion.
In recent quarters, GE’s renewable energy unit has weighed on the conglomerate’s quarterly results. However, the reinstatement of wind turbine tax credits included in the IR Act should be a big boost for the unit and GE as a whole.
Earlier this month, Bank of America analyst Andrew Obin wrote that given the reinstatement of tax credits, the unit’s operating profit should climb after this year.
“We continue to view GE shares as having a significant valuation discount relative to our sum-of-the-parts analysis,” reported the analyst, who cut his price target on GE stock to $105 from $120. $, but reiterated a “buy” note on the Name.
Stock to buy: Albemarle (ALB)
A lithium miner, Albemarle (NYSE:ALB) is benefiting enormously from the explosion in demand for electric vehicles. Of course, most electric vehicles use lithium-ion batteries.
Earlier this month, with second-quarter revenue nearly doubling year-over-year, Albemarle reported second-quarter EPS excluding certain items of $3.45, well above the average analyst estimate of $3.25. The company’s EPS jumped an incredible 288% year-over-year.
Additionally, Albemarle raised its 2022 revenue forecast by $7.1 billion to $7.5 billion from its previous estimate of $5.8 billion to $6.2 billion. The company now expects its revenue to more than double this year compared to 2021.
The company is benefiting from both higher lithium prices and renegotiations of its existing lithium contracts. “Over the past year, we have changed our procurement strategy for lithium to further capitalize on this strong market momentum,” Albemarle CEO said. Kent Masters in a statement.
Another business that is profiting hugely from pent-up travel demand is the online travel agency Expedia (NASDAQ:EXPE).
For the second quarter, the company said revenue rose 51% year-on-year to $3.2 billion, versus an average analyst forecast of $2.9 billion. Expedia EPS came in at $1.96, well above the mid estimate of $1.56. Impressively, Expedia’s gross accommodation bookings last quarter were 8% higher than the same quarter of 2019.
“Despite the disruptions during the summer travel season and an uncertain macro backdrop, travel demand remained strong,” Expedia CEO Peter Kern said in a statement. “We recorded our highest ever lodging bookings this quarter on the highest revenue and adjusted EBITDA for any second quarter,” he added on the earnings call.
Stock to buy: Chipotle (CMG)
Restaurant chain Chipotle (NYSE:GCM) is benefiting from better-than-expected consumer financial health as many people in high-paying jobs eat at its restaurants.
Chipotle’s Q2 EPS excluding certain items was $9.30 versus an average analyst estimate of $9.04. Same-store sales at its restaurants were up double-digit percentages year-over-year.
Chipotle implemented price increases in the second quarter and is expected to raise prices further in August. “Our longer-term view is consistent here – this is an incredibly strong business, delivering exceptional returns on new units with a long growth streak ahead of it,” Morgan Stanley wrote in response to the results of the second. quarter and optimistic comments from the company.
As of the date of publication, NAME held a long position in GE stock. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.