These stocks have earnings momentum into reporting season and analysts love them

Published Wed, Apr 13 20222:05 PM EDTUpdated Wed, Apr 13 20222:34 PM EDT

A challenging first-quarter earnings reporting season got underway this week and investors should be looking for the rare stocks in this tough 2022 market that have momentum going into their results. Here are a few... Companies are facing many issues in 2022, from inflation to labor challenges to supply disruptions from the war in Ukraine to rising interest rates. "Given the myriad headwinds faced by companies in the 1st quarter and the year ahead, we think 1Q reporting season has the potential to be a mess," RBC Capital Markets' Lori Calvasina said in a note Wednesday. Earnings growth for the S & P 500 is expected to be 4.5% in the first quarter, according to FactSet. That would mark the lowest earnings growth rate reported by the index since the last quarter of 2020. "Expectations on the profitability outlook are subdued when we dig into our analysis on the rate of upward EPS (earnings-per-share) estimate revisions," Calvasina added. But businesses with strong profit momentum could be poised to see shares outperform. To find the names with earnings momentum, CNBC Pro looked at first-quarter earnings expectations. We found companies that have seen consensus earnings estimates for the first-quarter rise by more than 10% since the beginning of 2022. CNBC Pro also narrowed down the pool to those with first-quarter earnings growth forecast to be greater than the S & P 500 average. We also examined full-year estimates. CNBC Pro identified names whose full-year consensus earnings projections have grown by more than 20% since the start of 2022. We then screened for the companies with full-year earnings growth expected to be greater than the S & P 500 average of 9.8%, according to FactSet. In other words, analysts are aggressively ramping up their estimates for these stocks into the results. From there, CNBC Pro found names a majority of Wall Street analysts rate a buy with at least 10% upside to consensus price targets. Take a look at our list. (Source: FactSet. As of April 13, 2022.) Energy companies feature prominently on CNBC Pro's list. The sector is the best-performing industry in the S & P 500 this year. Shares have rallied this year as the war in Ukraine raises concerns about global energy supply shortages, boosting the price of oil, natural gas and other commodities. ConocoPhillips and Devon Energy have seen first-quarter EPS estimates rise 37% and 35% this year, respectively. Each of their full-year EPS expectations have also roughly doubled in 2022. Albemarle has the highest projected earnings growth in the first quarter at 58.2%. The company has benefited from a runup in lithium prices in 2022. T-Mobile has seen the greatest EPS estimate increase over the year, nearly tripling. The stock is also well-liked on Wall Street with 83.9% of analysts calling it a buy. Other names on the screen include online payroll service Paycom , insurance company Assurant and auto tech stock Aptiv .

A ConocoPhillips refinery in Wilmington, California.

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