Welcome to earnings season, a time when investors adjust positions based on company performance and projections. But some suspect that the impact of this quarter's earnings will take a back seat to bigger picture issues.
According to Citigroup, Europe's sovereign debt crisis will play a more important role to investors given its potential to drastically alter the global economy.
"U.S. options traders see almost no chance that earnings, dividends or buybacks will influence stock prices through the end of 2011, instead placing record bets that equities move in lockstep in reaction to Europe's debt crisis. The Chicago Board Options Exchange S&P 500 Implied Correlation Index jumped to a record 90.28 on Sept. 30. The correlation coefficient of S&P 500 companies with the index has surged to 0.85, its highest level ever." (via Bloomberg)
Record high correlation among stocks indexes is certainly a driving factor. The rumors, actions, and slightest whims of politicians across the globe have had startling effects on market swings and have contributed heavily to the market volatility plaguing the market.
Given the immeasurable consequences of a European collapse, it's easy to understand how many investors may brush off earnings as a negligible statistic. After all, a strong earnings report for the third quarter will hardly matter if the economy plunges into a global recession and, given heavy correlation, drags that stock down with it. So instead, all eyes are on European developments in the hopes of gleaning some clarity of the economic future.
Meanwhile, earnings are hardly dismissable. After all, if the economic collapse doesn't come to be, they can prove just as valuable as ever. So which companies reporting earnings should be on your radar?
To help you find ideas, we scanned the earnings results of thousands of companies and identified a list of about 200 that have a history of beating analyst earnings expectations over the last year.
To refine the quality of our list, we only focused on those "earnings surprise" companies that have seen significant insider buying over the last six months.
These companies have a track record of beating analyst earnings estimates, and insiders seem to think there's more good news on the way -- should these companies be on your earnings radar? (Click here to access free, interactive tools to analyze these ideas.)
List compiled by Eben Esterhuizen:
1. Cadence Design Systems
2. West Bancorp
5. Hercules Offshore
6. Lincoln Educational Services
8. Webster Financial
9. National Penn Bancshares
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above.
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