Forget FAANG – These Two Stocks Will Report the Most Profitable Earnings Yet

We’re about to get into the most exciting part of earnings season.

And no, I’m not talking about results from big names like Facebook, Apple, or Tesla. Believe it or not, these aren’t the most exciting reports of earnings season.

They’re actually the most boring.

Analysts spend day in and day out talking about these stocks. Their results are expected, their trades are crowded, and if you’re asking me, they aren’t worth your money.

The companies that are announcing over the next three weeks are different. They’re the companies that have the least number of analysts tracking them…

Which means that you’ve got the best opportunity to turn announcements into profits. You just have to do a little homework…

Or let me do it for you.

Here are the top two most important earnings names to watch this week…

Stocks closed out last week on yet another strong note as investors continue to move away from the large-cap technology sector in favor of small-cap and industrial names.

The migration of cash from sector to sector is something that started immediately after the election as investors reacted to the likely change in focus that would come from the power shift at the Oval Office.

To date, many of the same sectors such as clean energy, old school energy, basic materials, and industrial stocks are leading the market higher.

Looking at my charts and data, these trends are likely to continue through the first half of the year.

While most analysts in the market are talking about how “frothy” things feel, the fact is that all of that worrying is starting to fortify my thought that this “Wall of Worry” market has more strength than most are giving it credit for.

The CBOE Volatility Index (VIX) plummeted to some relatively low readings last week as traders started to feel a little relief from the GameStop-inspired volatility, but let’s face it – that story is likely not over. It feels like we’re simply waiting to see when the Reddit Investor Army will direct its next attack.

And when that happens, you could be ready to pounce – if you’re following Andrew Keene, that is.

He’s discovered one of the best ways you could turn the next short squeeze into big profits. And he released his first recommendation this morning.

It may not be too late to jump on this potential ticking profit bomb – click here to learn how.

Now, apart from short squeezes, what is starting to shake things up a bit is the ongoing earnings season.

To date, we’ve seen most “headliner” earnings results announced over the last three weeks. But now we’re about to get into results from the smaller, lesser-known companies. This group of stocks is more exciting because there’s not as much published analyst research and expectations on them. Traders should love these stocks for that simple reason. Here’s a very small sample…

Leggett & Platt Inc. (NYSE:LEG), Martin Marietta Materials Inc. (NYSE:MLM), Fiserv Inc. (Nasdaq:FISV), Twitter Inc. (NYSE:TWTR), and Callaway Golf Co. (NYSE:ELY). (Okay, Twitter is well-known, I just wanted to have at least one mainstream company on the list. You caught me.)

Now, this is a very small sample of the more than 200 companies that are reporting earnings results (according to my database). But the message is clear. The earnings season will start awarding those investors that are willing to look at the data themselves and not just listen to the consensus of opinions on Wall Street.

To turn your attention from earnings season at this point would be a mistake. We’re about to get into the part of earnings season that yields the largest response from investors. Missing out on the next three weeks of earnings activity would be foolish.

I don’t often refer to those reading my outlooks as foolish, but we’re in the meaty part of the earnings season.

You see, the first three weeks of earnings season focus on the big names on Wall Street. You know them: Google, Microsoft, General Electric, Facebook, Tesla, Twitter, Netflix, Delta Airlines, Goldman Sachs, and I could go on and on and on…

Now, companies like this have two common denominators. First, the entire street is watching and waiting for their results. It’s like waiting for the last episode of Seinfeld – everyone is glued to their TVs.

Second, each of these companies – as well as the other companies that fall into the same category of “Must See Earnings TV” – are also the same companies that have 20-30 analysts forecasting their earnings. In other words, they start to fit the description of “crowded trades,” which means that they just don’t have the “element of surprise” that will help an earnings announcement turn into a double-digit move that puts profits in your pocket.

For the most part, the flood of companies that will be announcing over the next three weeks is covered less by the analysts and media, meaning that they are much less crowded with trading “noise.”

What does that mean for you?

Well, we want to avoid crowded stocks. It’s one of my 10 commandments of trading, after all – avoid running with the crowd. That means the opposite is true too. Any one of these lesser-known companies could become your next profit – in fact, I have a close eye on the following two…

  1. Tractor Supply Company (Nasdaq:TSCO)

This is one of those lesser-known retailers, but its worth getting to know in your portfolio.

The company announced its earnings last week, and they were great. Top and bottom line beats, plus the company raised forward-looking guidance. That’s the trifecta when it comes to an earnings announcement.

Technically, this stock tested its 50-day moving average ahead of the earnings report, but that trend has been strong. Shares are now heading to a break above the 20-day moving average and then finally off to new highs.

Sentiment is far from overheated as 16 of the 24 analysts that cover the stock have it ranked a “hold.” This tells us that the stock is far from “over-loved” and has room to run higher.

I like the shares to take out their highs and plan to recommend a trade to my Night Trader subscribers this week. To find out how you can sign up, give our VIP telesales team a call at 1-877-211-3024. Tell them you’re a Straight-Up Profits reader and are interested in learning how to sign up, and they’ll get you on your way.

  1. Martin Marietta Materials Inc. (NYSE:MLM)

Most people aren’t aware of MLM unless you’ve seen one of their trucks of storage quarries. The company supplies aggregates and heavy building materials, with operations spanning 26 states. Guess what, that puts them on the list of “first touch” recovery companies for 2021 – a list that I am recommending to readers given the large amount of infrastructure programs that the new President will roll out.

MLM will announce their earnings results Tuesday morning before the market opens. We’ve seen three quarters in a row of earnings beats from MLM. Another beat on Tuesday will see the stock take out its 20-day moving average on its way to $320 in the short-term.

That said, the stock’s longer-term trends imply that MLM and other material companies are in place to potentially outperform the large-cap technology stocks that worked so hard to hold the market through a tough 2020.

I’ll release even more earnings names later this week. Keep a close eye on your inbox…

Chris Johnson

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