As the earnings season kicks off, investors are eager to capitalize on short-term opportunities presented by the upcoming reports. Analysts are expecting a year-over-year earnings growth rate of 3.2% for the S & P 500, marking the third consecutive quarter of earnings growth. This period could offer tactical opportunities in the stock market, with S & P 500 stocks showing less correlation over the past 6 months, creating room for idiosyncratic opportunities.
Goldman Sachs has identified several stocks where its analysts are optimistic in terms of earnings per share relative to Street consensus. These stocks are expected to see sharp movements after reporting earnings, based on options market data.
One of the stocks on Goldman’s list is Royal Caribbean Cruises, which is up 1% this year. Analyst Lizzie Dove sees a potential 24% upside for the stock due to growing travel demand, strong pricing power, and the potential for higher capital returns. The company’s plans for private island expansion, fleet optimization, and re-launch in China could further drive up its stock value.
Nasdaq, the exchange operator, has been singled out for its growth in the fintech space. Goldman sees a 16% upside potential for the stock, which has already rallied 8% this year. Nasdaq’s earnings are projected to accelerate in 2025 and 2026 due to growth in its index business and better integration of its risk management software platform, Adenza.
Semiconductor and software company Broadcom has also been selected by Goldman for its list of optimistic stocks. Despite already climbing 22% this year, analyst Toshiya Hari sees an additional 17% upside for Broadcom. The company’s strategy to participate in durable markets and its leadership in custom artificial intelligence acceleration could drive further growth opportunities.
The earnings season presents a window of opportunity for investors to make short-term gains in the stock market. By paying attention to analyst recommendations and options market data, investors can identify potential winners based on positive earnings outlook and strategic business decisions made by the companies. It is important to conduct thorough research and analysis before making investment decisions during this period of heightened volatility.