These names stand out using one of the best methods to pick stocks, according to Ned Davis Research

Published Sun, Jun 27 20216:36 AM EDT

Jesse Pound @/in/jesse-pound @jesserpound

Investors looking to add stocks to their portfolio during the summer months should pay close attention to earnings expectations, according to Ned Davis Research. Corporate earnings season will start again in earnest next month, with major banks scheduled to report in mid-July. Expectations for the quarter are high, and rising higher. As of early June, stocks in the S & P 500 had their increase in second-quarter earnings estimates since 2002, according to FactSet's John Butters. While the increasing estimates could make the bar harder to clear for some companies, they should also be a good indicator for investors looking to buy, according to Ned Davis Research. "Earnings revisions has been one of the top-performing strategies over time. As the market outlook improves, investors reward the companies with improving earnings growth expectations," NDR's Brian Sanborn said in a note to clients last week. The firm's earnings earnings revisions factor measures the monthly change in one-year earnings projections by analysts. The strategy has performed particularly well after periods like Wall Street has seen over the past six months. "Earnings revisions was one of the top factors following strong periods of Value relative strength compared to Growth as in 1993 and 2006. This strategy has also exceled after all-time market highs and sentiment peaks," the note said. The firm highlighted several of the stocks from its portfolio picks list for high marks in its earnings revision factor and other strategies, including tech giant Facebook and Dow component UnitedHealth Group . Shares of Facebook have picked up momentum over the past three months, rising more than 20%. The stock hit a record high last week, as did Accenture , another member of Ned Davis' list. Other stocks on the list have faltered despite the increasing fundamental outlook. Machinery company Deere , for example, has seen its stock slip about 2% over the past three months. Retail chain Target is also on Ned Davis' portfolio list. According to FactSet, analysts expect the company to earn $12.26 per share for the fiscal year ending next January, up from an estimate of $8.77 per share in April.

In this photo illustration a Facebook logo seen displayed on a smartphone.

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Investors looking to add stocks to their portfolio during the summer months should pay close attention to earnings expectations, according to Ned Davis Research.

Corporate earnings season will start again in earnest next month, with major banks scheduled to report in mid-July.