- Advertisement -
Corporate reporting season is just around the corner, and corporate earnings expectations are muted at best. Data compiled by FactSet showed that third-quarter S&P 500 earnings are expected to rise just 2.4% year-on-year. This dim outlook comes as corporations face rising interest rates and persistently high inflation. These conditions raised fears that the US could slip into a recession. Billionaire investor Stanley Druckenmiller said on Sept. 28 that he believes the Federal Reserve’s attempts to move away from loose monetary policy could lead to a “hard landing” for the economy by the end of 2023. “I’ll be stunned if we don’t have a recession in 23. I do not know the time, but exactly by the end of the 23rd year. I wouldn’t be surprised if it’s nothing more than a so-called average garden variety,” he said. With that in mind, CNBC Pro set out to find out which stocks can still do well in this environment of muted overall earnings growth and rising chances of a U.S. recession. To do this, we reviewed the S&P 500 for stocks that met the following criteria: Expected earnings per share growth of at least 20% in 2022 Buy ratings from at least 70% of analysts covering the stock Analysts on average see upside potential of at least 20% share Here are the names on the list: Generac Holdings has the most potential upside potential of any stock on the list Analysts on average expect the home generator maker’s stock to rise more than 110% going forward, with earnings expected to rise up 25% in 2022. Valued in shares The firm also said that: “Grid instability continues to cause significant power outages in the US during periods of extreme weather.” Generac experienced difficulties in 2022, losing 56.2% during this time. Another stock that meets our criteria is Disney. Analysts predict that in 2022, earnings per share will rise by 67%, with stocks up 42% from current levels. Nearly three-quarters of those who cover stocks recommend buying them. It should be noted that the shares of the media giant this year have been hit hard, losing 37.3%. The company also recently faced pressure from activist investor Dan Loeb. At the end of September, Disney and Loeb’s Third Point entered into a deal that brought former Meta executive Caroline Everson to the board of directors. Energy stocks EQT and Diamondback Energy also made the list. EQT earnings are expected to rise by 420% in 2022, with 81% of analysts covering the stock recommending it as a buy. Diamondback’s earnings per share are also expected to more than double, with nearly three-quarters of analysts recommending the stock as a Buy. Both stocks have significantly outperformed the market as a whole, with EQT up 97.9% year-to-date and Diamondback Energy up 3.2%. Meanwhile, the S&P 500 is in a bear market, down 23% year-to-date. Energy stocks have been supported this year by rising oil prices. In 2022, West Texas Intermediate oil has risen in price by almost 24%. Other stocks on our list include Signature Bank, Monolithic Power Systems, ServiceNow, Synopsys, CDW, Assurant, and Howmet Aerospace.
Credit: www.cnbc.com /