Wall Street may be in for a surprise.
Ally Invest’s Lindsey Bell believes investors are underestimating the strength of earnings season, which kicks off Friday with the banks.
“That’s my biggest call going into this earnings season,” the firm’s chief investment strategist told CNBC’s “Trading Nation” on Thursday.
Refinitiv predicts S&P 500 fourth-quarter earnings results will fall 10% versus a decline of 7% in Q3. Bell believes the bar is set too low for corporate America because it’s weathering the coronavirus shutdowns better due to smarter government rules.
“They [corporations] may not reinstate guidance yet, but I think that the commentary they have around the outlook is going to be more upbeat than people actually expect,” said Bell, a CNBC contributor.
She has three S&P 500 groups on her bullish watch list: technology, industrials and consumer discretionary. According to Bell, consumer-oriented stocks should emerge among earnings season’s most unlikely winners.
“The consensus expectation for consumer discretionary is for more than a 30% decline year over year in the fourth quarter from a profitability perspective,” said Bell, who expects autos, internet retailers and general merchandise retailers to deliver the goods to investors.
Overall, Bell has been bullish on stocks — correctly predicting 2020’s year-end rally. As investors get ready to hear from the Street’s most widely held companies, she’s reiterating the market is also miscalculating the bullish impact of the Covid-19 vaccines on the economy and markets.
“What the Street is missing here is the margin opportunity that does lie within the S&P 500,” Bell said. “The market doesn’t seem to be fully pricing that in yet especially with the amount of stimulus that is coming down the pike.”
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Source: Finance - cnbc.com
