Retail investors tend to chase stocks they are familiar with. This can lead to inflated valuations and often underperformance in the long term. By using IBD's Rising Profit Estimates Screen, we can cut out some of the noise and find the best-performing stocks, regardless of sticker appeal.
Atkore manufactures and sells electrical, safety and industrial parts. While the company's description is mundane, its financials certainly are not. New data centers led growth in demand for Atkore's parts in the latest quarter, extending the firm's financial outperformance.
EPS of $4.33 beat analyst expectations of $3.56 while revenue of $840 million also came well above estimates of $768 million. Atkore traded up 11% Monday on the record results.
Hot Stock After Company's Strong Profit Growth
Remarkably, the price of Atkore's shares has gone up after the company's last 16 earning reports, and often by double digits. It feels like investors periodically forget about the company, only to dive back in after unexpected earnings growth. While retail investors may have lost interest, institutional investors certainly have not. Mutual funds have a 61% ownership stake in Atkore, according to MarketSmith.
Atkore is forming a double-bottom base with a 116.05 buy point. The company currently boasts IBD's top EPS Rating of 99. Earnings surged 182%, 491%, 272% and 144% the past four quarters.
Stifel Financial is rising past its 76.33 buy point after forming a lopsided double-bottom base. The financial services company reported its fourth-quarter results last week. EPS of $2.23 beat analyst estimates of $1.89, while revenue of $1.3 billion also topped analysts estimates.
While the firm grew across the board, institutional banking advisory revenues led the way with 79% year-over-year growth.
Stifel Financial is expected to continue to post solid results, with 2022 and 2023 EPS projections at $7.40 and $8.28, respectively, from $7.08 earned in 2021.
Soybean Company Another Hot Stock
Soybean exporter Bunge is trading above a 97.09 buy point with fourth-quarter earnings due on Feb. 9, even though shares briefly dipped 7% below the entry on Jan. 24. EPS estimates are at $2.37 with revenue projected at $14.9 billion. If results are met, a full-year EPS of $12.27 would represent 19% growth over a year prior.
Investors should be cautious investing in stocks before earnings reports due to the potential of heightened volatility once the results are announced. In the case of Bunge, investors can wait on the sideline for now and consider an alternate 100.03 buy point as an entry.
