3 Stocks With Rising Earnings, Sales

smartmoney.com,
Over the past year, Wall Street analysts have scrambled to raise their quarterly earnings forecasts ahead of company reports to reflect a surprisingly fast rebound in corporate profitability. That momentum might now be fizzling.

Forecasts for third-quarter earnings underlying the S&P 500 have fallen by a smidgen since the end of June, according to Standard & Poor’s. So have sales forecasts. Over the past four weeks, the ratio of index members with falling earnings forecast to rising ones is about 13-to-8.

If forecasts fall further, it could bode poorly for broad market returns. However, the companies below are defying the trend. Their current-quarter earnings estimates have increased over the past four weeks, as have their sales forecasts. Long-term studies show that increases in earnings estimates tend to foretell handsome stock returns. The same is presumably true of sales; one long-term study that looked at companies that beat earnings estimates found that the largest subsequent stock returns accrued to those companies that beat sales estimates, too. Their good fortune was perhaps more likely to reflect true growth rather than mere cost-cutting. (more)