Strong earnings expectations can be a powerful catalyst for stocks. Nvidia and Tesla rivals Li Auto and BYD are expected to deliver at least 30% earnings per share growth in the current fiscal year and next.
So do Aehr Test Systems, Array Technologies, Digital Ocean, Li Auto, Shift4Payments, Shoals Technologies and Xpel.
Stocks With Strong Earnings Expectations
| Company | Ticker | Expected EPS growth this year | Expected EPS growth next fiscal year |
|---|---|---|---|
| Aehr Test Systems | AEHR | 51% | 77% |
| Array Technologies | ARRY | 126% | 44% |
| BYD | BYDDF | 45% | 31% |
| Digital Ocean | DOCN | 82% | 33% |
| Li Auto | LI | 4000% | 131% |
| Nvidia | NVDA | 108% | 39% |
| Shift4Payments | FOUR | 62% | 33% |
| Shoals Technologies | SHLS | 53% | 59% |
| Xpel | XPEL | 51% | 30% |
Many of this year's market leaders are expected to deliver mediocre or declining earnings in 2023, with forecasts for powerful growth in 2024. Tesla earnings, for example are seen falling 17% in 2023 before rebounding 43% next year. Others are seen having robust profits this year but more-modest gains in 2024. But these nine names are expect to have strong if not stellar EPS gains through 2024.
Nvidia stock is the leader of the artificial intelligence boom. DOCN stock surged recently on an AI-tied acquisition. BYD and LI stock are part of the EV revolution, with Aehr Test Systems having heavy exposure to the EV chip space. Xpel is a leading auto parts name. ARRY stock and Shoals are two solar plays, while Shift4Payments is part of a reviving payments sector.
Li Auto Earnings Outlook Stands Out
Li Auto earnings per share is expected to skyrocket 4,000% in 2023. That's a bit distorted as EPS jumps to 41 cents from 1 cent in 2022. But Li Auto also is the name on this list with triple-digit growth (131%) seen next year.
Sales of Li Auto's premium hybrid SUVs are soaring. Li Auto also is the only notable EV maker that hasn't cut prices this year, unlike BYD and especially Tesla.
Li Auto stock gapped out of a three-month base in early May, thanks to booming Q1 EPS. After a brief consolidation offered another entry, shares took off again. LI stock is well extended, at their best levels in nearly a year.
Tesla Vs. BYD: EV Giants Vie For Crown, But Which Is The Better Buy?
Tesla Archrival In Buy Area
BYD stock is expected to deliver 45% EPS growth in 2023 with a 31% gain in 2024. That's after a 388% surge in 2022.
BYD sales are at record levels. The China EV and battery giant cut prices in recent months along with Tesla and most other EV and traditional automakers, but it's also moving upscale. The Tesla rival also will step up exports further, typically at substantially higher price points than at home.
Right now, BYD stock is the only name on this list that is currently actionable. Shares are slightly extended from a cup-with-handle buy point of 31.07 initially cleared two months ago. But it's still in range of a bounce from the 10-week line. BYD stock is forging a new consolidation. Investors could view this as a high handle to the consolidation from early February, or as a handle on a deep, yearlong consolidation.
Warren Buffett's Berkshire Hathaway is a long-time investor in the China EV giant. But Buffett has sold about half its big stake, starting in August 2022.
BYD earnings growth has been in the triple digits for the past four quarters, including a 368% spike in Q1 2023. The EV giant will likely report preliminary Q2 figures in the latter half of July. Profit growth is seen slowing in the latter half of the year amid tougher year-earlier comparisons.
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Nvidia Stock
NVDA stock is the S&P 500's top performer this year, and is setting up again. The AI leader has a four-weeks-tight pattern with a 439.90 buy point, but investors could use Friday's high of 432.14 as an early entry. A pullback to the 21-day line or a full-fledged base would be even more attractive.
Nvidia earnings are expected to spike 108% in fiscal 2024, even with Q1's already-reported 20% drop. Year-over-year comparisons get a lot easier for Nvidia earnings for the next few quarters. But EPS also should pop 39% in fiscal 2025.
Nvidia stock is on IBD Leaderboard.
Other Stocks Near Buy Points
Shift4 stock has retaken the 50-day line and is closing in on key resistance around around 69. Strong volume has been lacking though
AEHR stock is just below a 40.69 buy point, after tumbling 11% on July 5. Shares have been consolidating around the buy point for a few weeks, with 44.25 as another alternate entry. Aehr Test Systems is one of only three stocks listed here with over 50% EPS growth seen in 2023 and 2024, along with Li Auto and Shoals Technologies.
Aehr earnings for fiscal Q4 2023 are due on Thursday, July 13.
ARRY stock and SHLS stock has fallen below key levels amid tough times for solar plays. But with a solid recovery they could both clear short-term highs, offering aggressive entries.
Extended Stocks
Digital Ocean is extended from a buy range while Xpel stock is modestly out of range. But with their strong earnings outlooks, investors should still keep an eye on them.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
