Investors navigating a tough earnings season in the week ahead can stick to several stocks with a history of beating earnings expectations, according to Bespoke Investment Group. Investors and market observers are expecting a tough fourth quarter reporting season for stocks. According to UBS strategist Keith Parker, S & P 500 earnings are expected to fall 2.7% in the fourth quarter , snapping seven straight quarters of growth. Of the 56 S & P 500 companies that have reported so far, about 69% have surprised to the upside, while 31% missed expectations, according to FactSet data. Those results have already weighed on the major averages. This week, after a strong start to the year, the Dow Jones Industrial Average gave back its early January gain after a strong start to 2023. The average is now little changed on the year, on the back of some disappointing earnings. Conversely, the S & P 500 and Nasdaq Composite remain positive for the year, with the latter getting a boost Friday from positive signals in Netflix’s latest earnings report. Still, with the fourth quarter earnings season still in its early innings, Bespoke Investment has come up with names that are reporting next week that historically have a solid track record of beating expectations. Here are six such stocks. Homebuilder D.R. Horton typically surprises to the upside during earnings season. Of 85 prior reports, the Texas-based firm beat earnings per share forecasts 75% of the time, and sales expectations 69% of the time, according to Bespoke. What’s more, it has raised guidance 13% of the time. And, the stock typically rises 1.66% on the day it reports earnings. This month, UBS said in a note that D.R. Horton remains its top homebuilder pick in 2023, “given the company’s size/scale, first time/entry-level focus and consistent execution.” Cloud computing company ServiceNow also made the screen. Over the past 42 reports, ServiceNow topped profit and sales expectations 88% and 93% of the time, respectively. Additionally, it raised its guidance 24% of the time. Another stock that historically beats expectations is Mondelez . The Oreo and Chips Ahoy! cookie maker posted positive earnings per share surprises 83% of the time out of 41 prior reports, and positive sales surprises 56% of the time. The firm has raised guidance 2% of the time. Jefferies considers Mondelez one of its top large-cap food stocks, as it has “upward topline revision potential given emerging market strength/FX,” according to a note this month. Meanwhile, computer peripherals maker Logitech has surpassed earnings expectations 75% of the time, and sales expectations 67% of the time, in 69 prior reports. Logitech has raised guidance just 1% of the time, however. Other stocks included on the list are F5 and Visa .
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