When many companies are about to report earnings and stocks are volatile, it can be a good time to look for buying opportunities.
The Cboe S&P 500 Constituent Volatility Index, which essentially measures the average volatility of each constituent in the index, recently surpassed 50, its highest level since early 2025. A major driver of the large price swings is money rotating in and out of chip stocks. Every time investors take profits in those names by selling the shares, they allocate capital into other areas of the market, and vice versa.
The good news is that with chip stocks bouncing off recent lows, plenty of other industries are beaten down and look more appealing. Even better, most companies haven't reported second-quarter earnings yet, which means there's a large subset of stocks that are both beaten-down and poised to beat earnings estimates -- making them ripe for picking.
That's why Evercore strategist Julian Emanuel created a screen of names that fit the bill.
To make the screen, a stock had to underperform its sector year to date through last week's close, see analysts revise next year's earnings estimates by a better percentage than the average revision for its sector, and have beaten analysts' revenue and profit estimates in at least seven of the past eight quarters. These companies also tend to raise forward-looking guidance when they report earnings.
Also, each stock has short interest -- the percentage of shares sold short -- that is in at least its 90th percentile of the past two years. The idea is that these stocks are already down, so short sellers will have to buy shares back if the companies show any sign of strength when they report.
The screen includes many companies that report after this week, so investors have time to study up. It includes Alphabet, Regeneron Pharmaceuticals, medical device maker Stryker, Paycom Software, payroll services provider Paychex, and financial companies Nasdaq and Moody's.
Another is Booking Holdings, which reports Aug. 4. The keys to remember: The company has beaten earnings estimates every quarter since June 2021, according to FactSet, with the vast majority of those beats driven by better-than-expected sales, and it rarely cuts guidance.
It did cut earlier this year because of something out of its control: the conflict involving Iran hurt travel demand in the Middle East. But now, analysts and portfolio managers are aware of that dynamic and have already incorporated the headwind into estimates for the coming quarterly report.
That can help Booking beat expectations again. Importantly, the Middle East typically accounts for only a low-single-digit percentage of revenue, so stronger-than-expected results from its larger, faster-growing markets could be enough to drive another earnings beat.
Meanwhile, the stock is down more than 15% year to date, versus a gain for the U.S. Global Jets ETF, a decent proxy for U.S. travel companies. The point is that Booking has a clear chance to push its stock higher -- more in line with other travel stocks -- whether the catalyst is an expected rebound in Middle East travel or better-than-anticipated sales in other regions.
Booking and these other stocks look interesting ahead of earnings.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 15, 2026 13:20 ET (17:20 GMT)
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