Analysts Expect These Stocks To Report Higher Earnings This Quarter

It appears that some stocks will be better positioned for gains than others as Wall Street gears up to release its earnings for another quarter. 

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In the first quarter of 2023, the S&P 500 index rose by a little more than 7%, marking the second quarter in a row it has recorded a positive result. As a result of a tech-stock rally, which overshadowed a regional banking crisis brought on by Silicon Valley's and Signature's failure, the broad market gained strength, even outpacing a worldwide economic decline.

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You only have to look at the Performance of the Technology Select Sector SPDR Fund (XLK), which is up 20% so far this year, through the close of trading on Monday. As we move into 2023, the Financial Select Sector SPDR Fund (XLF) has experienced a 6% decline from where it started in 2022. 

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There is no doubt that first-quarter earnings reports will provide an insight into which companies are truly resolute in the wake of the Fed's rate hike campaign, especially with investors keeping one eye on the financial sector and the other on the Federal Reserve's rate hike campaign. In order to determine which stocks have the greatest upside potential heading into the upcoming earnings season, CNBC Pro examined FactSet data to screen for stocks widely considered by Wall Street analysts as having the most potential. 

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There were a number of criteria in the search that had to be met in order for the name to be included in the S&P 500: 

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• During the past three months, earnings per share estimates have been revised upward at least five times

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• Three- and six-month changes in forward earnings per share predictions of at least 10%

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• In the past three months, there have been no more than five downward earnings revisions

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• Over the past three months, average price targets have increased by at least 10%

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Stocks to Watch This Earnings Season on Wall Street

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• Booking Holdings Inc.

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• Paccar Inc Industrials

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• Ceridian Hcm Holding, Inc.

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• Salesforce, Inc.

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• Cadence Design Systems, Inc.

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• United Rentals, Inc.

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• Ansys, Inc.

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• Analog Devices, Inc.

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• W.W. Grainger, Inc.

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In the next six months, almost 51% of earnings per share are expected to increase at Booking Holdings. Averaging nearly 19% in price over the past three months, the stock's price target has increased over the past three months. The stock has gained nearly 28% since the start of 2022 after dropping 16% last year. It is worth noting that more than half of the analysts who cover Booking Holdings still rate the stock as a buy or a strong buy, according to data from Refinitiv. 

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During earnings season, Paccar is also expected to outperform during the period. The truck manufacturer's shares are up more than 26 percent over the past 12 months (they haven't dropped since 2018), and analysts polled by Refiniv expect the shares will gain another 9% over the next year, which means the shares are among the best performers in the market. During the past six months, estimates for earnings per share on a per-share basis have increased by 42%. Over the last three months, the price target of the truck manufacturer that makes Peterbilt and Kenworth has also risen by nearly 11%. According to Refinitiv data, the only sour note may be the fact that almost two-thirds of the analysts covering Paccar stock give it a hold rating, which might be the only drawback to the stock. 

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This screen was also made by Salesforce, a company that makes customer relationship management software. After falling 48% last year, Salesforce's stock price has soared almost 45% in 2023 as a result of an activist hedge fund move led by Dan Loeb at Third Point, Elliott Investment Management, Starboard Value, Inclusive Capital and ValueAct Capital Partners, following strong activist investments from hedge funds in the form of activist moves by hedge funds in the form of activist moves. Over the next six months, Salesforce is expected to increase its earnings per share by 24%. 

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On our screen, we also saw companies like Ansys and Ceridian HCM Holdings, both of which offer software as a service.

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