These stocks may be your best bet during this earnings season

Published Mon, Jan 28 20191:56 PM ESTUpdated Mon, Jan 28 20197:35 PM EST

Earnings estimates are coming down fast, but AB Bernstein says that shouldn't stop investors from picking up stocks. Wall Street analysts are slashing year-end earnings expectations for the S & P 500 . They have fallen to about $170 per share from expectations of over $175 per share in mid-December. However, according to AB Bernstein, it's typical to see larger than usual earnings revisions in January, and investors can turn to sectors where analysts are raising forecasts: heath care equipment and services, software and retail. "January is typically a period in which estimates get 'trued up.' While the move is sharp, it is neither a complete surprise nor without precedent," Bernstein's Noah Weisberger said in a note on Monday. "The risks from downward revisions, at least at the index level, are muted. In fact, revisions tend to lag returns, so arguably, in the wake of the Q4 sell off, the subsequent cut in estimates is not a complete surprise." Most of the revision — about $3 of the $5 decline in estimated EPS — can be attributed to the energy sector, which took a hit from a drop in oil prices in late 2018, and Apple , which lowered its revenue guidance by 8 percent on Jan. 2, blaming the slowdown on weaker sales in China. Weisberger pointed out the sectors where earnings expectations have been revised higher but the stocks have underperformed relative to their revision strength. NetApp is one company that stands out, with its price far below its peers given its positive revisions, and the same case for Broadridge Financial Solutions and Fortinet . The market has rebounded from December's brutal sell-off. The S & P 500 is up more than 10 percent from its worst Christmas Eve ever. The strength is mainly driven by strong fourth quarter earnings, but slower profit growth is on the horizon as the first-quarter earnings are expected to be up just 3.9 percent, according to Refinitiv. "Although more companies' estimates are being revised lower than normal, most of those negative revisions are small," Weisberger said.

Daniel Sorabji | AFP | Getty Images

Earnings estimates are coming down fast, but AB Bernstein says that shouldn't stop investors from picking up stocks.

Wall Street analysts are slashing year-end earnings expectations for the . They have fallen to about $170 per share from expectations of over $175 per share in mid-December. However, according to AB Bernstein, it's typical to see larger than usual earnings revisions in January, and investors can turn to sectors where analysts are raising forecasts: heath care equipment and services, software and retail.