These 2 Basic Materials Stocks Could Beat Earnings: Why They Should Be on Your Radar

Zacks identifies Air Products and Chemicals (APD) and SQM as potential earnings-surprise candidates based on positive Earnings ESPs. APD has a +0.79% ESP, with a $3.63 most accurate EPS estimate versus a $3.60 consensus ahead of its November 5, 2026 report; SQM has a +16.15% ESP, with estimates of $2.35 versus $2.02 ahead of its November 17 report. The article cites a Zacks backtest in which stocks with a #3 rank or better and positive ESP produced positive surprises 70% of the time; these are estimates, not reported results.

Analysis

Treat the positive estimate gaps as a short-dated positioning signal, not evidence of improving business quality. The asymmetry is greater for SQM, but the larger gap also warrants checking whether recent estimate changes reflect durable lithium pricing and volumes or a narrow, potentially reversible input. For APD, the small gap is especially vulnerable to ordinary estimate noise; a beat would matter more if accompanied by better operating cash flow, execution and forward guidance—not EPS alone.

Immediate reaction may be driven by positioning and the size of the reported surprise versus the bar actually embedded in the share price. Over the next 1–3 months, verify estimate revisions, lithium price/volume assumptions for SQM, and APD’s segment performance, cash conversion and project execution. A headline beat without stronger forward indicators can sell off as a “good number, bad guide.” Over 6–18 months, these ESP readings have little standalone value: SQM remains exposed to commodity-cycle and operating/regulatory uncertainty, while APD’s durable value depends on project economics and cash returns. No clear competitive share shift or supply-chain winner follows from the article. The promotional backtest is not independently validated here and does not establish expected returns for either stock.

Key Decisions for Investors

• Do not buy either name solely on ESP. Before APD’s November 5 report, require evidence that revisions are broadening and check operating cash flow, project execution and guidance; the narrow estimate gap offers limited cushion.
• Keep SQM on an event watchlist ahead of November 17. If lithium pricing and estimate revisions independently confirm the direction, consider a small, defined-risk call spread rather than an unhedged earnings bet; cap risk at the premium and compare it with implied volatility first.
• Falsify the bullish setup if estimates are revised down before results, SQM’s relevant commodity/volume indicators weaken, or either company beats EPS but reduces forward guidance or shows deteriorating cash conversion.
• For any post-report trade, wait for guidance and underlying operating indicators before extrapolating a one-quarter surprise; absent confirmation, there may be no trade.