(By Rich Bieglmeier) With the stock market suddenly under pressure from all angles, finding strategies that work can be difficult. Fortunately, Wall Street is filled with smart people whose job it is figure out how to make money in any environment.
Goldman Sachs found that companies that have reported earnings and sales above expectations have handsomely outperformed the S&P in the following week. During the first quarter, Goldman's research shows that seven out of 10 double beats topped the index by nearly 2% in the week after the announcement.
On the flip side, 77% of companies that missed Wall Street's consensus target underperformed afterwards.
Now, investors have a working strategy to put into play, buy stocks that beat on the top and bottom line, short an equal dollar amount of the S&P 500 against it, and hold it for a week. Based on the evidence, you could pair up the qualifying beats with companies that fall short as out and underperformance relationship should be magnified.
As long as the buy outperforms the short, no matter if the market is up or down 500 points, investors print profits.
With more than 1000 companies scheduled to announce the quarterly profits in the week ahead, it's next to impossible to watch them all. So, iStock used the trusty screener to find companies with a history of exceeding forecasts for sales and earnings with analysts revising revenue and/or profits higher.
The lucky seven are:
ProAssurance Corp. (PRA) reports after the market closes on Monday
Granite Construction Inc. (GVA) reports after the market closes on Monday
Generac Holdings Inc. (GNRC) reports before the market opens on Tuesday
Hawaiian Electric Industries Inc. (HE) Tuesday, during market hours
Seattle Genetics Inc. (SGEN) reports after the market closes on Tuesday
Primoris Services Corp. (PRIM) reports after the market closes on Wednesday
Procera Networks Inc.