It may be rare, but stocks can rally even when a company is not profitable. Investing in these stocks can be risky since they are likely to have inferior EPS Ratings.
So what happens when analysts actually think a company's profits are on the rise? That can be a powerful tailwind for a rally. When proven market leaders get that endorsement, the next step is to analyze the chart action and see if any of the stocks are nearing buy points.
Rising Profit Estimates As Nvidia Sets Up Ahead Of Earnings
Investors' Business Daily's stock screen of Rising Profit Estimates shows several stocks, including three Magnificent Seven stocks. The screen, with more than 200 stocks on Tuesday, identifies companies for which analysts have raised their consensus profit estimates.
Nvidia is in a consolidation with a buy point of 974. Analysts see profits rising 84% for the current fiscal year and 21% the next fiscal year.
The AI leader reports its April-quarter results on May 22. Sales are expected to grow 242% to $24.6 billion, while earnings estimates of $5.20 per share indicate a 473% increase from the prior year. The stock has an ideal EPS Rating of 99.
Google parent Alphabet is also a stock rallying partly on rising profit estimates. Shares gapped up after first-quarter results beat estimates on April 26. The stock is extended from a 153.78 buy point now.
For the full year, analysts see earnings of $7.78 per share, or a 35% increase. Alphabet holds a near-ideal EPS Rating of 98.
Amazon.com is also rallying as analysts expect higher profits in the current and next year. For this year, analysts' consensus estimate is for earnings to grow 74% to $5.03 per share, rising 25% more next year to $6.30 a share. Its EPS Rating is 81.
The stock is near new highs, but has yet to form a proper base.
Outside the Magnificent Seven, Pinterest is trying to break out of a cup base with a buy point of 41.60.
The crafts marketplace reported first quarter results on April 30, when both sales and earnings growth accelerated. Sales grew 23% to $740 million, while earnings of 20 cents per share were 150% higher than the year-ago period.
Its relative strength line is at a 52-week high, a bullish sign. Rising profit estimates underpin the stock's action. For 2024, earnings are seen rising 33% to $1.45 per share, while for 2025 analysts expect 23% growth to $1.79 per share.
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