- Wall Street’s Q2 earnings season kicks off this week.
- A select group of companies is poised to deliver explosive growth.
- Investors should consider buying Nucor, EOG Resources, and Airbnb.
- Earnings Date: Thursday, July 21
- EPS Growth Estimate: +60.8% Y-o-Y
- Revenue Growth Estimate: +30.5% Y-o-Y
- Year-To-Date Performance: -4.3%
- Market Cap: $29.1 Billion
- Earnings Date: Friday, August 5
- EPS Growth Estimate: +151.4% Y-o-Y
- Revenue Growth Estimate: +48.1% Y-o-Y
- Year-To-Date Performance: +12%
- Market Cap: $58.2 Billion
- Earnings Date: Thursday, August 11
- EPS Growth Estimate: +500% Y-o-Y
- Revenue Growth Estimate: +56.7% Y-o-Y
- Year-To-Date Performance: -42%
- Market Cap: $61.4 Billion
The U.S. second quarter earnings season kicks into high gear this week.
Analysts expect Q2 S&P 500 earnings growth of 4.1%, which—if confirmed—would mark the slowest year-over-year increase since the fourth quarter of 2020.
While most of the focus will be on the big-name mega-cap technology stocks, like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG), Amazon.com (NASDAQ:AMZN), and Tesla (NASDAQ:TSLA), there are several fast-growing names set to enjoy explosive profit and sales growth thanks to surging demand for their products and services.
Here are three names well worth considering ahead of their quarterly reports in the weeks ahead.
Nucor
Nucor Corp. (NYSE:NUE), is the largest steel producer in the United States and the 14th largest worldwide. Apart from the metal itself, the company also manufactures a wide variety of steel products, such as bars, beams, sheets, and plates.
The Charlotte, North Carolina-based company—which reported blowout earnings and revenue in the first quarter—is slated to release its latest financial results ahead of the opening bell on Thursday, July 21.
Consensus calls for earnings of $8.28 per share, improving nearly 61% from EPS of $5.15 in the year-ago period. Revenue is forecast to increase 30.5% year-over-year to $11.47 billion, thanks to a potent combination of solid steel prices and robust demand for steel products.
If confirmed, Nucor’s quarterly profit and sales total would mark the highest in its history.
Investors will also scrutinize Nucor’s update regarding its outlook for the rest of 2022 as the company looks set to continue to deliver on its key priorities amid strong steel market fundamentals and a favorable demand environment.
After rallying to a record peak of $187.90 on April 21, NUE stock closed at $109.17 last night. At current valuations, the steel products company, whose shares are down 4.3% year-to-date and 41.9% below their all-time high, has a market cap of $29.1 billion.
Despite recent turmoil, Nucor shares are well-positioned to bounce higher in the coming months, thanks to the company’s robust earnings outlook, attractive valuation, and pristine balance sheet.
Indeed, 12 out of 13 analysts surveyed by Investing.com rate Nucor’s stock either as ‘outperform’ or ‘hold’, while only one has a ‘sell’ rating on the name.
The average NUE stock analyst price target is around $134.7, representing an upside of around 23.4% over the next 12 months.
Source: Investing.com
Similarly, the quantitative models in InvestingPro point to a gain of 45.5% in NUE stock from current levels, bringing shares closer to their fair value of $158.82.
Source: InvestingPro
EOG Resources
EOG Resources, Inc. (NYSE:EOG) is one of the biggest independent oil and natural gas companies in the United States. Its core business operations involve exploring, developing, producing, and marketing crude oil, natural gas, and natural gas liquids.
The Houston, Texas-based energy firm reported solid first quarter financial results in early May and announced a special $1.80 dividend. For Q2, the company is scheduled to report before the U.S. market opens on Friday, August 5.
Consensus calls for earnings per share of $4.35 for the second quarter, improving 151.4% from EPS of $1.73 in the year-ago period. Revenue is forecast to jump about 48% year-over-year to an all-time high of $6.13 billion, boosted by high oil and gas prices.
Beyond the top and bottom line figures, investors will be eager to hear if EOG plans to return more cash to shareholders in the form of increased special dividend and regular dividend payouts, and share buybacks.
EOG, one of the country’s lowest cost oil producers, has previously stated that it plans to return at least 60% of its annual free cash flow to investors, putting it on track to pay out $4.8 billion in dividends this year.
The oil producer, which has never suspended or reduced its dividend, currently offers a quarterly payout of $0.75 per share, which implies an annualized dividend of $3.00 at a yield of 3.02%.
EOG stock ended Tuesday’s session at $99.49, pulling back after hitting a record peak of $147.99 on June 8. At current levels, it has a market cap of $58.2 billion, making it the fourth largest U.S. oil producer, behind Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), and ConocoPhillips (NYSE:COP).
Shares of the low-cost shale oil producer, owner of premium acreage in the Eagle Ford shale formation in south Texas and the Permian’s Delaware Basin, have outpaced the broader market this year, rallying 12% in 2022.
Many analysts generally remain bullish on EOG, citing its strong long-term prospects. In an Investing.com survey of 31 analysts, 19 rated EOG stock as a ‘buy’; 11 rated it as a ‘hold’, and only one considered it a ‘sell’.
Source: Investing.com
Among those surveyed, the stock had a roughly 52% upside potential with an average 12-month price target of $151.60.
Likewise, according to a number of valuation models, the average fair value for EOG Resource’s stock on InvestingPro stands at $153.75, a potential 54.5% upside from the current market value.
Source: InvestingPro
Airbnb
Founded in 2007, Airbnb (NASDAQ:ABNB) operates an online marketplace platform for vacation rentals, cabins, beach houses, unique homes, and tourism experiences worldwide. It is widely viewed as a competitive threat by the hotel industry.
After easily topping Wall Street estimates in the previous quarter and giving upbeat guidance, the online travel giant is forecast to report solid second quarter results after the U.S. market closes on Thursday, August 11.
Consensus estimates call for Q2 earnings per share of $0.44, improving 500% from a net loss of $0.11 in the same quarter a year earlier. Revenue is forecast to climb 56.7% year-over-year to $2.1 billion as travel continues to rebound from the impact of the coronavirus health crisis.
In addition to the top and bottom line numbers, growth in nights and experiences booked will also be in focus after the key metric easily beat expectations to surpass pre-pandemic levels in the first quarter.
Airbnb, which went public in December 2020, has underperformed the broader market by a wide margin over the past several months as fears over the Federal Reserve’s aggressive rate hike plans sparked a rout in many top-rated growth companies.
After rallying to a record high of $219.88 in February 2021, ABNB stock--down 42% year-to-date--tumbled rapidly to a low of $86.71 on June 30.
Airbnb shares have since clawed back some losses, closing at $96.55 on Tuesday, but they still stand roughly 56% below their all-time high.
At current levels, the San Francisco, California-based online vacation-rental booking platform has a market cap of around $61.4 billion.
The short-term rental company remains well-positioned to capitalize on the ongoing recovery in the travel industry thanks to pent-up demand and the growing work-from-anywhere trend.
Source: investing.com
Out of the 39 analysts covering Airbnb’s stock, per an Investing.com survey, the consensus recommendation comes to ‘outperform’ with fairly high conviction. 15 analysts rate ABNB at ‘buy’, 21 consider it a ‘hold’, and 3 have it at ‘sell’.
Meanwhile, their average target price of $169.28 gives ABNB an implied upside of roughly 75% over the next year.
Additionally, the average fair value price for Airbnb shares on InvestingPro stands at $118.42, a potential 22.7% upside from the current market value over the next 12 months.
Source: InvestingPro
Disclaimer: At the time of writing, Jesse does not own shares in any of the companies mentioned. The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.