Here is a synopsis of all five stocks:
Based on consensus estimates, analysts are projecting solid double-digit EPS growth for LyondellBasell both for this year and next year. Despite this, shares trade at less than 13x forward earnings. While shares have made strong gains so far this year, there seems to be plenty of upside potential left.
The Olefins and Polyolefins – Americas segment has been a major profit growth driver for LYB over the last couple of years as its margins have expanded greatly thanks to lower raw material costs.
The company is facing headwinds from lower farm income and continued weakness in the mining industry. And this isn’t a trend that’s likely to reverse anytime soon.
Earnings estimates have plummeted for Titan International over the last couple of weeks, sending the stock to a Zacks Rank #5 (Strong Sell). And with shares trading at a lofty 29x forward earnings, investors should look for a better opportunity elsewhere.
Second-quarter GDP data by the U.S. Bureau of Economic Analysis shows that the economy is currently gaining solid traction and the year should end on a positive note. An expanding economy generally translates to business growth, increased job prospects and higher real income.
It is worth noting that the U.S. economy expanded at an annual rate of 4% in the second quarter of 2014, exceeding the 3% expectation and much ahead of the 2.1% decline registered in the first quarter.
The transportation sector had witnessed a modest first quarter on account of a severe winter. However, the second quarter looks more promising. Not only does the current momentum in the macro economy worked in its favor, the sector fundamentals are also looking up.
The railroad companies that have declared earnings so far this quarter have recorded growth in most of the sectors with agriculture and industrial being the front runners. Meanwhile, Intermodal has retained its solid growth momentum. Within the airline space, most of the U.S. based passenger carriers have reported improved traffic figures owing to high demand as the economy continues to expand.
The second-quarter earnings season is about to close. Within the transportation sector, 90.9% of the participants have reported earnings so far. The average earnings and revenue growth came in at 11.7% and 6.7%, respectively. This signals a positive momentum for the remainder of the transportation companies.
With the earnings season still on the roll, one can zero in on a handful of transportation stocks that seem confident of beating earnings estimates in their upcoming announcements. An earnings surprise should help these stocks outperform in the near term.
Earnings ESP is our proprietary methodology for determining stocks that have high chances of surprising with their next earnings announcements. An earnings ESP reflects the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
For investors seeking to benefit by applying this strategy to their portfolio, we present three transportation stocks that have the right combination of elements to beat earnings this quarter.
Indications of an economic turn-around are evident in the economy at large. With the transportation sector banking upon substantial improvements in the fundamentals of airline and railroad stocks, we believe this is the right time to invest in the potential winners within the sector.
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SOURCE Zacks Investment Research, Inc.