With earnings season in the books, we've seen a lot of surprises, some good and some bad. We asked three of our analysts for the best stocks to buy now that earnings season is behind us. Here's what they had to say:
Dan Caplinger: One of the best turnaround stories so far in 2015 has been TripAdvisor (NASDAQ:TRIP). Back in November, the online travel information company's third-quarter results left investors uncertain whether it could take impressive revenue growth and turn it into higher profits for shareholders.
Yet early last month, TripAdvisor more than made up for its past earnings woes. During its fourth quarter, TripAdvisor's revenue climbed by 35%, but adjusted net income soared an even faster 73%, with strength in all three of its primary segments. The company still relies on click-based and display-based advertising revenue for a considerable portion of its overall sales, but increasingly, subscription- and transaction-based revenue have come to play a more important role in TripAdvisor's business mix. Moreover, TripAdvisor has become an important player around the world, with international revenue roughly matching what it gets from its home North American market.
Best of all, TripAdvisor expects better results in 2015 as it aims at expanding its business to make itself a one-stop shopping experience for its customers. By combining hotels, restaurants, and destination attractions, TripAdvisor could easily find itself becoming a must-have service for travelers everywhere, benefiting customers as well as shareholders not just this year but well into the future.
Todd Campbell: The beautiful thing about earnings season is that investors can walk away from earnings conference calls with a much clearer understanding of a company's prospects. That insight can be incredibly valuable to helping you decide whether to own shares in any particular company.
Out of all the conference calls I listened to this earnings season, one that I came away most bullish from was Celgene Corporation's (NASDAQ:CELG). Celgene delivered a rock-solid quarter that included sales of $2.08 billion and EPS of $1.01, $0.02 ahead of estimates, as well as sales and earnings guidance that most companies would envy.
Thanks to rising sales for its cancer drugs Revlimid, Pomalyst, and Abraxane, and building momentum for its autoimmune drug Otezla, Celgene expects that its revenue will jump 22.3% at the midpoint this year to between $9 billion and $9.5 billion. Celgene also thinks that its EPS will come in between $4.60 and $4.75, an increase of roughly 26% year over year. That's impressive, but even more compelling is the companies guidance for revenue of between $13 billion and $14 billion and EPS of about $7.50 in 2017. With guidance like that, it's not hard to see why I think this is a stock that investors can buy.
Matt Frankel: I like to use earnings season as a time to find bargains. Specifically, I like to focus on companies that disappointed the market for economic reasons, not because something is wrong with the business. Procter & Gamble (NYSE:PG) is a great example this earnings season.
Procter & Gamble missed expectations mainly thanks to the strong U.S. dollar and certain foreign currency fluctuations. For example, the 54% decline in the Russian ruble alone was responsible for millions of dollars in losses. As a result, the company missed expectations and lowered its full-year forecast for the 2015 fiscal year. Shares are down by more than 6% since the announcement.
However, while currency issues may indeed inhibit Procter & Gamble's earnings growth over the next few years, the company is a rock-solid long-term investment. It has one of the most impressive portfolios of brand names that are known and respected the world over. To name a few, P&G produces Gillette shaving products, Tide and Gain laundry products, Crest toothpaste, and Pampers diapers.
Over the past two decades, Procter & Gamble has averaged total annual returns of more than 11%, and this temporary issue shouldn't stand in the way of excellent long-term performance over the next 20 years. If anything, now is an excellent time to get into this long-term winner at a better price.