Welcome to earnings season!
This week marks the start of companies reporting profits for the fourth quarter of 2020.
Investors make some of their biggest profits during earnings season because stocks can react sharply to any news included in a company’s earnings report.
And if you’re invested before the news hits, you can benefit when a positive report sends a stock surging higher.
I expect a lot of big moves for a handful of key stocks this earnings season.
There will be a tremendous opportunity for profit growth as the coronavirus vaccine is distributed and certain areas of the economy reopen.
And this earnings season, management teams will tell investors exactly how they plan to take advantage of these opportunities in the weeks and months ahead.
So optimism from these reports sets the stage for you to grow your retirement wealth!
But remember, you need to invest before the news hits so you’re in the position to profit from the stocks’ reaction to these earnings reports.
Here are a few key names you should consider before their upcoming earnings announcements…
Earnings Pick #1: Delta Airlines Inc. (DAL)
As we look forward to the economy reopening, travel is one of the biggest areas for improvement.
Much of the Wall Street research that I’ve read assumes that there will be a gradual return to travel with people and businesses being hesitant to book trips.
But there’s certainly a case to be made that we could see a much stronger surge in travel as people make up for time lost during 2020.
I know that I’m eager to get back together with my St. Paul Research team in Baltimore as soon as it’s safe for us to meet.
And I feel about looking forward to getting together with extended family as soon as possible.
This excitement to travel could lead to some big surprises this earnings season.
Delta Airlines Inc. (DAL) is scheduled to report earnings Thursday, Jan. 14 before the market opens. Management will then host a conference call to discuss the earnings announcement and expectations for the year ahead at 10:00 a.m. EST.
If Delta’s management team tells us that travelers are already starting to book more flights for the year ahead, the news could spark a new sense of optimism on Wall Street and send shares surging higher!
As you can see in the chart below, there’s still plenty of room for Delta to run before getting back to where the stock was trading before the crisis.
And if travelers decide to make up for lost time and book more trips than before the crisis, we could see fare prices rise, profits jump and airline stocks rising to new highs.
Make sure you check this name out before Delta reports on Thursday morning!
Earnings Pick #2: J.B. Hunt Transport Services Inc. (JBHT)
Manufacturing has been one of the bright spots in the economy recently.
After pausing to protect workers from catching the virus and to set up factories with better logistics to keep germs from spreading, manufacturing plants are once again churning out products!
This is great news for the job market because these factories are bringing workers back and writing payroll checks.
It’s also great news for retailers — many of which were running low on inventories of products to sell to customers.
Perhaps the companies that will benefit most from the rebound in manufacturing are trucking companies. Firms like J.B. Hunt Transport Services Inc. (JBHT) operate fleets of trucks, train cars and other assets to help get raw materials to factories and finished products to customers.
JBHT is scheduled to report earnings next Tuesday after the market closes. The company’s conference call will take place at 5:00 p.m. EST.
As you can see in the chart below, shares have already started trending higher as investors anticipate a strong year ahead for shipping.
I expect the management team to confirm that shipping volumes are picking up. And hopefully, they’ll provide some color about customer reservations in the months ahead. These details would help investors gain more confidence in future earnings throughout 2021.
One reason to be optimistic about JBHT is the company’s dividend. Currently, JBHT pays a $0.27 quarterly dividend. And while this only gives you a 0.7% yield, we can expect bigger payments ahead!
JBHT typically increases its dividend every year. And the company’s February dividend would be the next logical quarter to hike its dividend.
With annual earnings expected to be near $6.04 per share in 2021, JBHT could announce a larger than normal dividend hike.
That kind of good news could be a great catalyst to send shares higher. Consider buying before next Tuesday’s announcement!
Earnings Pick #3: Citigroup Inc. (C)
One of the emerging themes that I’m keeping my eye on is the rise in market interest rates.
Recently, the yield on the 10-Year Treasury Bond rose above 1%. And while that’s still very low compared to other periods in history, it’s above the lows we saw midway through last year.
Rising interest rates are helpful for banks, allowing them to charge higher rates for loans.
More importantly, higher interest rates usually correspond to a rebounding economy. And as the economy improves, banks can offer more services to customers and grow profits.
Shares of Citigroup Inc. (C) are moving higher as investors look for the best ways to profit from the economic rebound.
And these investors are eagerly anticipating Citigroup’s earnings announcement, which is scheduled for this Friday morning before the market opens.
In addition to reading through Citi’s report, I’ll also be listening for helpful guidance during the company’s conference call. This call is scheduled to kick off at 11:30 a.m. EST Friday.
Citi’s dividend is also a big part of the investment story for this stock. Shares currently offer investors a 3.1% yield, which is certainly very attractive. But that yield could be much bigger if the Fed gives banks like Citi the green light to increase their payments to investors this year.
So as we move towards Citi’s earnings announcement at the end of the week, I’d recommend considering some shares for your retirement account right away!
That’s all for today. But I look forward to sharing more retirement and income ideas with you tomorrow!