The latest earnings season just began. If you like to follow the reports like many investors do, here are some ideas to create your own stock watch list.
We ran a screen on the healthcare sector for stocks with a high average of positive earnings surprises over the last four reporting periods.
Whenever a company releases earnings data that beats analyst expectations, the stock will often rise in value to price in the good news.
If you believe that company characteristics can cause EPS surprises to persist across time, this list may be very interesting to you.
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Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.?
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We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.
Do you think these companies will surprise yet again? Use this list as a starting point for your own analysis.
List sorted by average earnings surprise.
1. WellCare Health Plans, Inc. (WCG): Provides managed care services for government-sponsored healthcare programs in the United States. Market cap of $2.45B. In Dec 2010: Reported EPS at 0.71 vs. estimate at 0.52 (surprise of 36.5%). In Mar 2011: Reported EPS at 0.66 vs. estimate at 0.16 (surprise of 312.5%). In Jun 2011: Reported EPS at 1.77 vs. estimate at 0.95 (surprise of 86.3%). In Sep 2011: Reported 2.15 vs. estimate at 1.31 (surprise of 64.1%). [Average earnings surprise at 124.85%]. The stock has had a couple of great days, gaining 7.22% over the last week.
2. Vertex Pharmaceuticals Incorporated (VRTX): Engages in the discovery, development, and commercialization of small molecule drugs for the treatment of serious diseases worldwide. Market cap of $7.73B. In Dec 2010: Reported EPS at -0.9 vs. estimate at -0.93 (surprise of 3.2%). In Mar 2011: Reported EPS at -0.87 vs. estimate at -1.09 (surprise of 20.2%). In Jun 2011: Reported EPS at -0.85 vs. estimate at -0.96 (surprise of 11.5%). In Sep 2011: Reported 1.02 vs. estimate at 0.21 (surprise of 385.7%). [Average earnings surprise at 105.15%]. The stock has had a couple of great days, gaining 11.93% over the last week.
3. Boston Scientific Corporation (BSX): Develops, manufactures, and markets medical devices used in various interventional medical specialties worldwide. Market cap of $8.24B. In Dec 2010: Reported EPS at 0.12 vs. estimate at 0.1 (surprise of 20%). In Mar 2011: Reported EPS at 0.14 vs. estimate at 0.04 (surprise of 250%). In Jun 2011: Reported EPS at 0.12 vs. estimate at 0.09 (surprise of 33.3%). In Sep 2011: Reported 0.1 vs. estimate at 0.08 (surprise of 25%). [Average earnings surprise at 82.08%]. The stock has lost 25.27% over the last year.
4. Akorn, Inc. (AKRX): Engages in the manufacture and marketing of diagnostic and therapeutic pharmaceutical products, hospital drugs, and injectable pharmaceuticals in the United States and internationally. Market cap of $1.02B. In Dec 2010: Reported EPS at 0.08 vs. estimate at 0.04 (surprise of 100%). In Mar 2011: Reported EPS at 0.07 vs. estimate at 0.05 (surprise of 40%). In Jun 2011: Reported EPS at 0.08 vs. estimate at 0.05 (surprise of 60%). In Sep 2011: Reported 0.09 vs. estimate at 0.07 (surprise of 28.6%. [Average earnings surprise at 57.15%]. The stock has gained 86.14% over the last year.
5. OraSure Technologies Inc. (OSUR): Develops, manufactures, markets, and sells oral fluid diagnostic products and specimen collection devices in the United States and internationally. Market cap of $469.37M. In Dec 2010: Reported EPS at -0.02 vs. estimate at -0.08 (surprise of 75%). In Mar 2011: Reported EPS at -0.06 vs. estimate at -0.08 (surprise of 25%). In Jun 2011: Reported EPS at -0.05 vs. estimate at -0.07 (surprise of 28.6%). In Sep 2011: Reported -0.03 vs. estimate at -0.07 (surprise of 57.1%. [Average earnings surprise at 46.42%]. The stock is a short squeeze candidate, with a short float at 5.45% (equivalent to 11.06 days of average volume). The stock has gained 48.58% over the last year.
6. Salix Pharmaceuticals Ltd. (SLXP): Develops, and commercializes prescription drugs for the treatment of gastrointestinal disorders in the United States. Market cap of $2.92B. In Dec 2010: Reported EPS at 0.66 vs. estimate at 0.49 (surprise of 34.7%). In Mar 2011: Reported EPS at 0.34 vs. estimate at 0.17 (surprise of 100%). In Jun 2011: Reported EPS at 0.54 vs. estimate at 0.49 (surprise of 10.2%). In Sep 2011: Reported 0.77 vs. estimate at 0.63 (surprise of 22.2%). [Average earnings surprise at 41.78%]. The stock is a short squeeze candidate, with a short float at 12.13% (equivalent to 7.63 days of average volume). The stock has had a good month, gaining 11.6%.
7. Synovis Life Technologies Inc. (SYNO): Develops, manufactures, and markets mechanical and biological products used by surgical specialties for the repair of soft tissue damaged or destroyed by disease or injury. Market cap of $311.75M. In Jan 2011: Reported EPS at 0.16 vs. estimate at 0.1 (surprise of 60%). In Apr 2011: Reported EPS at 0.17 vs. estimate at 0.14 (surprise of 21.4%). In Jul 2011: Reported EPS at 0.17 vs. estimate at 0.15 (surprise of 13.3%). In Oct 2011: Reported 0.24 vs. estimate at 0.18 (surprise of 33.3%). [Average earnings surprise at 32%]. The stock has had a good month, gaining 51.36%.
8. Hi Tech Pharmacal Co. Inc. (HITK): Develops, manufactures, markets, and sells generic, prescription, over-the-counter, and nutritional products in liquid and semisolid dosage forms in the United States. Market cap of $455.56M. In Jan 2011: Reported EPS at 0.79 vs. estimate at 0.63 (surprise of 25.4%). In Apr 2011: Reported EPS at 0.98 vs. estimate at 0.71 (surprise of 38%). In Jul 2011: Reported EPS at 1.05 vs. estimate at 0.84 (surprise of 25%). In Oct 2011: Reported 1.04 vs. estimate at 0.77 (surprise of 35.1%). [Average earnings surprise at 30.87%]. The stock is a short squeeze candidate, with a short float at 14.11% (equivalent to 5.97 days of average volume). The stock has gained 39.83% over the last year.
9. Impax Laboratories Inc. (IPXL): Engages in the development, manufacture, and marketing of bioequivalent pharmaceutical products. Market cap of $1.32B. In Dec 2010: Reported EPS at 0.23 vs. estimate at 0.22 (surprise of 4.5%). In Mar 2011: Reported EPS at 0.24 vs. estimate at 0.15 (surprise of 60%). In Jun 2011: Reported EPS at 0.22 vs. estimate at 0.19 (surprise of 15.8%). In Sep 2011: Reported 0.3 vs. estimate at 0.23 (surprise of 30.4%). [Average earnings surprise at 27.68%]. The stock is a short squeeze candidate, with a short float at 6.49% (equivalent to 7.15 days of average volume). The stock has lost 3.77% over the last year.
10. Kindred Healthcare Inc. (KND): Operates as a healthcare services company in the United States. Market cap of $547.26M. In Dec 2010: Reported EPS at 0.54 vs. estimate at 0.44 (surprise of 22.7%). In Mar 2011: Reported EPS at 0.65 vs. estimate at 0.48 (surprise of 35.4%). In Jun 2011: Reported EPS at 0.53 vs. estimate at 0.51 (surprise of 3.9%). In Sep 2011: Reported 0.41 vs. estimate at 0.29 (surprise of 41.4%). [Average earnings surprise at 25.85%]. The stock is a short squeeze candidate, with a short float at 13.49% (equivalent to 7.23 days of average volume). It's been a rough couple of days for the stock, losing 6.08% over the last week.
11. Aetna Inc. (AET): Operates as a diversified health care benefits company in the United States. Market cap of $15.92B. In Dec 2010: Reported EPS at 0.63 vs. estimate at 0.62 (surprise of 1.6%). In Mar 2011: Reported EPS at 1.43 vs. estimate at 0.97 (surprise of 47.4%). In Jun 2011: Reported EPS at 1.35 vs. estimate at 1.08 (surprise of 25%). In Sep 2011: Reported 1.4 vs. estimate at 1.15 (surprise of 21.7%). [Average earnings surprise at 23.92%]. Might be undervalued at current levels, with a PEG ratio at 0.77, and P/FCF ratio at 7.21. The stock has had a good month, gaining 10.21%.
12. Unitedhealth Group, Inc. (UNH): Provides healthcare services in the United States. Market cap of $56.36B. In Dec 2010: Reported EPS at 1.05 vs. estimate at 0.84 (surprise of 25%). In Mar 2011: Reported EPS at 1.22 vs. estimate at 0.89 (surprise of 37.1%). In Jun 2011: Reported EPS at 1.16 vs. estimate at 0.94 (surprise of 23.4%). In Sep 2011: Reported 1.17 vs. estimate at 1.12 (surprise of 4.5%). [Average earnings surprise at 22.5%]. The stock has gained 37.83% over the last year.
13. ICU Medical, Inc. (ICUI): Engages in the development, manufacture, and sale of disposable medical connection systems for use in vascular therapy applications in the United States and internationally. Market cap of $618.89M. In Dec 2010: Reported EPS at 0.72 vs. estimate at 0.53 (surprise of 35.8%). In Mar 2011: Reported EPS at 0.57 vs. estimate at 0.47 (surprise of 21.3%). In Jun 2011: Reported EPS at 0.67 vs. estimate at 0.56 (surprise of 19.6%). In Sep 2011: Reported 0.65 vs. estimate at 0.58 (surprise of 12.1%). [Average earnings surprise at 22.2%]. The stock is a short squeeze candidate, with a short float at 17.72% (equivalent to 33.05 days of average volume). The stock has gained 23.07% over the last year.
14. Magellan Health Services Inc. (MGLN): Provides managed behavioral healthcare, radiology benefits management, specialty pharmaceutical management, and Medicaid administration products and services in the United States. Market cap of $1.42B. In Dec 2010: Reported EPS at 0.95 vs. estimate at 0.91 (surprise of 4.4%). In Mar 2011: Reported EPS at 1.02 vs. estimate at 0.79 (surprise of 29.1%). In Jun 2011: Reported EPS at 1.07 vs. estimate at 0.86 (surprise of 24.4%). In Sep 2011: Reported 1.03 vs. estimate at 0.84 (surprise of 22.6%). [Average earnings surprise at 20.12%]. The stock has lost 0.34% over the last year.
15. Orthofix International N.V. (OFIX): Designs, develops, manufactures, markets, and distributes medical equipment used principally by musculoskeletal medical specialists for orthopedic applications. Market cap of $705.10M. In Dec 2010: Reported EPS at 0.67 vs. estimate at 0.41 (surprise of 63.4%). In Mar 2011: Reported EPS at 0.56 vs. estimate at 0.55 (surprise of 1.8%). In Jun 2011: Reported EPS at 0.69 vs. estimate at 0.63 (surprise of 9.5%). In Sep 2011: Reported 0.67 vs. estimate at 0.65 (surprise of 3.1%). [Average earnings surprise at 19.45%]. The stock has had a couple of great days, gaining 10.47% over the last week.
16. HealthSpring Inc. (HS): Operates as a managed care organization in the United States. Market cap of $3.71B. In Dec 2010: Reported EPS at 0.89 vs. estimate at 0.77 (surprise of 15.6%). In Mar 2011: Reported EPS at 0.75 vs. estimate at 0.59 (surprise of 27.1%). In Jun 2011: Reported EPS at 1.23 vs. estimate at 0.95 (surprise of 29.5%). In Sep 2011: Reported 1.16 vs. estimate at 1.13 (surprise of 2.7%). [Average earnings surprise at 18.72%]. The stock has gained 79.54% over the last year.
17. ZOLL Medical Corp. (ZOLL): Develops, manufactures, and markets resuscitation devices and related software solutions worldwide. Market cap of $1.51B. In Dec 2010: Reported EPS at 0.18 vs. estimate at 0.16 (surprise of 12.5%). In Mar 2011: Reported EPS at 0.27 vs. estimate at 0.2 (surprise of 35%). In Jun 2011: Reported EPS at 0.42 vs. estimate at 0.35 (surprise of 20%). In Sep 2011: Reported 0.52 vs. estimate at 0.49 (surprise of 6.1%). [Average earnings surprise at 18.4%]. Exhibiting strong upside momentum--currently trading 5.68% above its SMA20, 33.93% above its SMA50, and 35.85% above its SMA200. The stock has had a couple of great days, gaining 5.77% over the last week.
18. Herbalife Ltd. (HLF): Sells weight management, nutritional supplement, energy, sports and fitness, and personal care products worldwide. Market cap of $6.46B. In Dec 2010: Reported EPS at 0.66 vs. estimate at 0.56 (surprise of 17.9%). In Mar 2011: Reported EPS at 0.72 vs. estimate at 0.6 (surprise of 20%). In Jun 2011: Reported EPS at 0.88 vs. estimate at 0.75 (surprise of 17.3%). In Sep 2011: Reported 0.87 vs. estimate at 0.76 (surprise of 14.5%). [Average earnings surprise at 17.42%]. The stock has had a couple of great days, gaining 8.43% over the last week.
*Earnings data sourced from Yahoo! Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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