As we begin to head deeper into earnings season, it’s always a good idea to keep an eye out for companies that deliver positive surprises and are executing their business strategy at a high level. That way, you can potentially adjust your investment plans to account for stocks that could become new market leaders.
Strong post-earnings reactions can signify the beginning of a massive rally in some cases, and we are already seeing some very positive price action for some of the companies that have recently delivered their quarterly numbers.
Oftentimes, a strong earnings report tells us a business is booming and that it is well-positioned to continue delivering impressive results. While it can be intimidating to buy a stock after it gaps up to new highs, keep in mind that the longer a gap up remains unfilled the higher the probability is that it will continue higher.
Several companies that just delivered strong earnings results are certainly worth adding to your watch list going forward, which is why we’ve prepared a brief overview of a few standouts below. Let’s take a look at 3 post-earnings plays to buy now.
1. Chipotle Mexican Grill
Long-term holders of Chipotle Mexican Grill (NYSE:) will certainly be able to afford extra guacamole after the company delivered astoundingly positive that sent shares soaring to new highs. It’s perhaps the single best restaurant stock to own going forward and could be in for even more upside thanks to several factors.
First, the fact that more people are heading back to dine in Chipotle stores is certainly helping the company’s sales. The company’s revenue grew by 38.7% year-over-year to $1.9 billion thanks to a 31.2% increase in comparable restaurant sales.
This is a trend that should continue throughout the year, and the fact that last year’s numbers were impacted by stay-at-home orders means that should easily beat its 2020 figures.
There’s also a lot to like about how the company’s digital sales are growing, 10.5% in Q2, and accounted for 48.5% of overall sales. Chipotle’s pivot towards improving its digital sales channels during the pandemic was a very intelligent strategic move that should continue to pay off for years to come.
With strong forward guidance and plenty of new restaurant openings last quarter, Chipotle is a stock that could be headed for the $2000 per share mark sooner than you think.
Chipotle Mexican Grill is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.
2. AutoNation
Another strong post-earnings play to consider adding at this time is AutoNation (NYSE:), a company that offers a range of automotive products and services such as new vehicles, used vehicles, parts and services, and automotive finance and insurance products.
With the demand for new and used cars expected to remain strong well into 2022, this is a business that should continue to see strong sales across its 315 retail locations. Two factors are driving this trend—supply chain issues related to the global semiconductor shortage and low interest rates. Investors should expect the stock to perform well as long as those two factors are at work.
A red hot car market resulted in AutoNation reporting all-time record quarterly EPS of $4.83 in Q2, up 52% year-over-year. The company also reported all-time record of $7 billion in Q2, up 54% year-over-year which is confirmation that business is booming at this time.
Finally, investors should be attracted to the company’s share repurchase program and huge size that allows for economies of scale.
3. HCA Healthcare
The healthcare industry is another area of the market that is very intriguing at this time, and HCA (NYSE:) is a quality name that tends to be overlooked by many investors. It’s one of the largest services providers in the United States, as it operates 185 hospitals across the country.
Keep in mind that certain restrictions and policies dramatically reduced patient volumes last year, which in turn negatively impacted this company’s revenue. Now, HCA is rebounding nicely from the pandemic, as emergency room visits and surgeries bounced back in a big way last quarter.
Same facility admissions increased by 17.5% and same facility emergency room visits increased 40.5% in Q2, confirming that some of the factors which affected the company last year are no longer as impactful. HCA also saw its Q2 increase by 30% year-over-year to $14.4 billion along with a Q2 EPS increase of 38% year-over-year to $4.36 a share.
We know how essential quality health care is in the United States, and owning a company like HCA Healthcare is an excellent way to gain exposure to the industry.