Listen to the audio version of this article (generated by AI).
The best time of year for stocks has arrived, folks.
I hope you are as excited as I am, because we are officially in the seasonally strongest stretch of the calendar.
Several important catalysts are set to converge over the next few weeks. But the one I’m most excited about is third-quarter earnings season.
Analysts have been raising their estimates, and that is setting the stage for another strong round of quarterly results. FactSet currently expects the S&P 500 to post average third-quarter earnings growth of 29.5%.
Given the positive analyst revisions we’ve seen, along with corporate America’s tendency to beat expectations, I wouldn’t be surprised if actual earnings growth comes in north of 33%.
But some parts of the market could do much better than that.
And in today’s Market 360, I want to show you two areas where Wall Street is expecting some truly stunning earnings growth. Then, I’ll show you how to use my Stock Grader AI tool to hunt for the strongest stocks within those sectors. And finally, I’ll wrap things up by showing you how I take this research one step further to find stocks with the best chance to deliver big gains through year-end.
Follow the Earnings
Right now, two areas stand head and shoulders above much of the market: technology and energy.
The information technology sector is expected to report the second-highest earnings growth of all 11 S&P 500 sectors. FactSet currently forecasts average earnings growth of about 65%.
That should come as little surprise.
The artificial intelligence and data center buildout continues to create enormous demand for semiconductors, memory, power equipment and other critical infrastructure.
Energy could be even stronger.
FactSet currently expects the energy sector to report average earnings growth of 114% in the third quarter, thanks to higher oil prices and stronger demand.
That is the kind of earnings growth that gets my attention. And judging by some fascinating new data about my new Stock Grader AI tool, individual investors are noticing these areas, too.
What Investors Are Searching For
My team recently reviewed the searches investors are making on Stock Grader AI – the new feature built on top of my Stock Grader system.
Stock Grader analyzes more than 6,000 stocks based on the factors I care about most, and assigns each one a letter grade from A to F.
Stock Grader AI adds a new layer.Instead of looking up stocks one at a time, you can ask the tool questions in plain English and use it to screen for groups of highly rated stocks based on a sector, industry or theme.
Based on last week’s data, nearly 2,500 of my premium subscribers used Stock Grader AI. The tool processed11,324 prompts.
But what caught my attention wasn’t simply the number of searches. It was what investors were asking…
The single most popular category involved finding A-rated stocks within particular sectors or industries.
That makes sense. A strong investment theme can point you toward an attractive part of the market. But there can still be dozens, sometimes hundreds, of stocks within that theme.
The harder question is: Which ones are actually worth owning?
That’s exactly the kind of question Stock Grader AI can help answer. Instead of searching through companies one by one, you can ask it to narrow the field.
For example, a lot of users searched “A-rated AI infrastructure stocks”. Here’s a glimpse at what they found…
There was another interesting clue in last week’s search data. Micron Technology, Inc. (MU) was the single most-searched ticker, with 212 searches.
That makes sense, because Micron announced earnings last week. It usually serves as the “after party” to the previous earnings season. It also tells me investors are paying very close attention to the memory-chip story.
Why Energy Deserves Your Attention
As a new earnings season approaches, I’m sure more folks will focus their searches on the industries where profits are growing fastest.
But technology isn’t the only place I’d be looking.
The situation in global energy markets remains unusually favorable for many producers and refiners.
And Stock Grader AI users are clearly paying attention. Among the most popular searches last week were requests for A-rated stocks in the Energy Minerals sector, A-rated shipping stocks and other transportation names.
There’s a good reason for all that interest. Global oil inventories have fallen sharply this year.
The Energy Information Administration (EIA) estimates that inventories have fallen by an average of 3.9 million barrels per day during the second quarter. It estimates that another three million barrels per day came out of inventories in the third quarter, with another 1.7 million barrels per day drawdown forecast for the fourth quarter.
That matters because countries around the world eventually need to replenish those stockpiles.
As a result, the EIA expects crude oil prices to average around $90 per barrel in the near term.
There is also another problem brewing: diesel.
Refineries have been squeezed by limited crude supplies and shutdowns tied to tensions in the Middle East. Global refining capacity has declined by about 3.52 million barrels per day.
Meanwhile, diesel inventories are at record lows, prices are at record highs – and the shortage is expected to persist through 2027.
That’s painful for consumers. But for refiners, it creates a very different situation.
Higher diesel prices and strong refining margins can translate into booming sales and earnings.
That doesn’t mean every energy stock is a buy. Far from it. You still need to make sure a company boasts superior fundamentals.
Take Shell plc (SHEL), for example.
Shell operates across crude oil production, refining, gasoline and diesel sales and other energy businesses. Analysts currently expect third-quarter earnings of $3.24 per share, representing 74.2% year-over-year growth.
Even more encouraging, earnings estimates have risen about 21% over the past three months.
It’s no wonder, then, that the company earns a Total Grade of A (Very Strong) in Stock Grader.
Screening Is Only the First Step
One of the biggest advantages of Stock Grader AI is that it can help turn a broad investing idea into a much smaller list of fundamentally strong candidates.
You might start with AI infrastructure. Or memory chips. Or refiners.
Stock Grader AI can help you find the companies with the strongest grades inside those groups – just like I showed you with Shell in the example above.
But that’s still only part of my investing process. Once I find a fundamentally superior stock, I want to know something else: Are the big institutions quietly accumulating shares – or are they unloading their positions before the rest of the crowd catches on?
That distinction can make a huge difference.
That’s where my research comes in.
Stock Grader helps me identify fundamentally strong candidates. But the P.I. layer lets me dig deeper into the ownership picture and look for signs that institutional money may already be moving.
We’re heading into what could be another explosive earnings season. And institutional money will be deciding which companies deserve more capital and which ones don’t.
In my latest presentation, I explain how I’m using P.I. alongside my quantitative research to identify stocks that could be attracting institutional buying before the rest of Wall Street catches on.
Sincerely,
抖阴最新版
Editor, Market 360
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
