Why Investors Need to Take Advantage of These 2 Oils and Energy Stocks Now

The article details Zacks' Earnings ESP (Expected Surprise Prediction) tool, which identifies stocks likely to beat quarterly earnings estimates by comparing the Most Accurate Estimate to the Zacks Consensus Estimate. Historically, stocks with a positive ESP and a Zacks Rank #3 (Hold) or stronger have delivered positive earnings surprises 70% of the time and generated average annual returns of 28% over a 10-year backtest. SolarEdge Technologies (SEDG) and Chevron (CVX), both currently holding a Zacks Rank #3, are highlighted as examples with positive ESPs of +4.53% and +3.63% respectively, indicating a strong probability of exceeding their upcoming earnings expectations.

Analysis

The Zacks Earnings Expected Surprise Prediction (ESP) model identifies a high probability of positive earnings surprises for both SolarEdge Technologies (SEDG) and Chevron (CVX) ahead of their upcoming quarterly reports. According to the model's 10-year backtest, stocks with a positive ESP and a Zacks Rank of #3 (Hold) or better—criteria met by both SEDG and CVX—have historically delivered a bottom-line beat 70% of the time. The signal for SEDG is driven by a +4.53% ESP, with its Most Accurate Estimate of -$0.79 per share surpassing the consensus of -$0.82 ahead of its August 7 report. Similarly, CVX shows a +3.63% ESP, as its Most Accurate Estimate of $1.72 per share is higher than the $1.66 consensus just two days before its August 1 earnings release. While the positive ESP suggests a short-term catalyst, the neutral Zacks Rank #3 (Hold) for both companies implies an expectation of in-line market performance, indicating this signal is more of a tactical, event-driven indicator based on recent positive analyst revisions rather than a fundamental long-term upgrade.

Key Decisions for Investors

• Investors could consider tactical long positions in Chevron (CVX) and SolarEdge Technologies (SEDG) ahead of their respective August 1 and August 7 earnings dates to potentially capitalize on a positive stock reaction to an earnings beat.
• Recognize that this opportunity is based on a short-term technical indicator, as the fundamental Zacks Rank for both stocks is #3 (Hold), suggesting positions should be managed as event-driven trades rather than long-term strategic investments based on this data alone.
• Traders should monitor not only the headline earnings-per-share figure but also management's forward guidance and the full report, as a simple beat does not guarantee a sustained positive stock move.