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Big Cap Earnings Look Bullish for 2020

Tracey Ryniec
  • (0:35) - Q3 Earnings Overview: Should Investors Be Optimistic?
  • (8:50) - What Is The Finance Sector Showing Us?
  • (14:10) - What’s Exactly Happening With The Small Cap Companies?
  • (19:35) - Are The FANG Stocks Back On Top?
  • (24:00) - Episode Roundup: AAPL, GOOGL, NVDA, JPM, BAC, C

Welcome to Episode #201 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

This week, Zacks Director of Research, Sheraz Mian, joins the conversation to discuss the third quarter earnings season and the outlook for 2020.

Third Quarter Earnings Season: Better Than Expected

The doom and gloom bears were proven wrong in the third quarter as third quarter earnings were down just a measly 1.7%, with 447 members of the S&P 500 having already reported.  It’s mostly the retailers that still remain.

Even the finance sector, which has finished reporting for the quarter, saw earnings up 3% on 9.3% revenue gains.

Additionally, companies didn’t warn on the fourth quarter, nor on 2020, as expected.

Therefore, analysts remain bullish that the outlook could actually improve in 2020 with earnings expected to return to a record high with 8.5% growth.

Revenues are also expected to jump 4.7% which implies an acceleration of the global economy next year.

Where Can Investors Find Big Cap Bargains?

Even with the solid reports by the financials, some of them remain values including the big banks such as JPMorgan Chase & Co. JPM, Bank of America BAC and Citigroup C.

They have the scale to still grow margins even as the Fed cuts interest rates.

Big Technology’s Advantages

Also, despite renewed calls for more regulations on big technology companies, they have advantages such as size that prohibits competitors from entering the space.

Their size also allows them to be able to hire thousands of employees to do things such as content quality checks.

Apple AAPL and Alphabet GOOGL have both been hitting new all-time highs recently.

According to Sherarz, the FAANG stocks, Facebook, Amazon, Apple, Netflix and Alphabet, will make up almost 1/10th of the S&P 500’s earnings by the 2020-21 time period.

The large cap advantage isn’t going away anytime soon.

What else should investors know about the earnings outlook?

Tune into this week’s podcast to find out.

[In full disclosure, the author of this article owns shares of GOOGL in her personal portfolio.]

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