US earnings season begins next week. Sectors to watch. Opinion

What to expect from the US corporate financial reporting season next week.

The first, according to tradition, are the largest banks; behind them – all the rest. True, some companies have already reported and showed excellent growth. Such as Levi Strauss (LEVI US).

Which sectors look better than the rest in Q3 2020? Which sectors have the best chance of outperforming analysts’ forecasts?

In our opinion, it makes sense to pay attention to the following sectors in the upcoming reporting season:

Banks. One of the most undervalued market sectors. After the lockdown, the number of offline-strengthening economic activity increased in banks.

Example: JP Morgan (JPM US).


Medical equipment and services. In 2, the main part of hospitals and hospitals around the world has been converted for coronavirus cases. However, in the third quarter, medical facilities gradually began to return to normal activities. We do not exclude that the 3rd quarter may become very successful for them, especially due to the low base effect, which was in the 2nd quarter.

Example: Abbott Laboratories (ABT US).

Retail. First of all, offline retail focus, which returned to active work after the lockdown. Levi Strauss’s example is very indicative: analysts predicted EPS loss, but the company showed profits.

Example: Ralph Lauren (RL US).

Construction sector and basic materials. These sectors also returned to active activity in the 3rd quarter, in our opinion, have a good chance to exceed forecasts of Wall ST.

Example: NVR (NVR US), Nucor (NUE US)).

Transport will try to show good results. This is especially true of companies associated with cargo transportation (road transport and railway), as well as airlines.

Example: Old Dominion (ODFL US).

Hotels, tourism. Beginning in the second half of summer, people still went on long-awaited vacations. Here, the main beneficiaries can be chain hotels and other companies related to the tourism business.

Example: Marriott (US MAR).

Of course, you need to be aware that buying stocks before reporting is a high-risk strategy. The company can report excellently, outstripping forecasts, but poor management guidance for the next quarter can land the quotes very seriously.

In each case, you need to think 10 times before buying. At the same time, the most thorough analysis does not guarantee that you will receive speculative profits. It is often quite the opposite. But, nevertheless, there are chances.

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