Why Investors Need to Take Advantage of These 2 Finance Stocks Now

Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.The Zacks Earnings ESP, ExplainedThe Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% annual returns on average, according to our 10 year backtest.Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), or the top 15% and top 5% of stocks, respectively, should outperform the market; Strong Buy stocks should outperform more than any other rank.Should You Consider CME Group?Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. CME Group (CME) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $2.68 a share, just nine days from its upcoming earnings release on October 23, 2024.CME has an Earnings ESP figure of +4.69%, which, as explained above, is calculated by taking the percentage difference between the $2.68 Most Accurate Estimate and the Zacks Consensus Estimate of $2.56. CME Group is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.CME is part of a big group of Finance stocks that boast a positive ESP, and investors may want to take a look at Royalty Pharma (RPRX) as well.Royalty Pharma, which is readying to report earnings on November 13, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.97 a share, and RPRX is 30 days out from its next earnings report.For Royalty Pharma, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.95 is +2.65%.Because both stocks hold a positive Earnings ESP, CME and RPRX could potentially post earnings beats in their next reports.Find Stocks to Buy or Sell Before They're ReportedUse the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CME Group Inc. (CME): Free Stock Analysis Report Royalty Pharma PLC (RPRX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks