Investors have been quick to punish stocks for signs of weakness in their businesses. Wolfe Research has identified seven companies that have managed to buck the trend.
The stock market has become an unforgiving place. Chip stocks have been hit hard this summer amid concerns about how long the boom in artificial-intelligence infrastructure spending can last. A sharp rise in interest rates earlier this week added to the pressure.
Even strong earnings haven't always been enough. Tech company Keysight Technologies beat earnings and revenue estimates Tuesday after the close, but its shares fell more than 6% Wednesday.
Against that backdrop, Wolfe Research Chief Investment Strategist Chris Senyek screened for companies with three things working in their favor: they beat second-quarter revenue and earnings estimates; analysts expect their sales to grow at least 15% in calendar 2026; and their shares have shown positive momentum since they reported earnings. The combination identifies companies delivering strong growth whose stocks have also responded positively to those fundamentals.
The screen includes Caterpillar, electronic-components maker Amphenol, and industrial EMCOR Group. Also making the cut are cybersecurity company Fortinet, enterprise technology company Zebra Technologies, pharmaceutical giant Eli Lilly, and biopharmaceutical company Incyte.
Barron's took the analysis a step further, looking for stocks whose relative valuations are near the low end of their three-year ranges. Those relatively low valuations could leave more room for shares to rise if earnings continue to grow.
Two names stand out on that measure: Zebra Technologies and Eli Lilly.
Zebra trades at just under 17 times forward earnings, below the S&P 500's multiple of about 20 times. Over the past three years, Zebra's valuation relative to the index has typically been higher, with the midpoint of that range roughly in line with the S&P 500. The stock appears relatively inexpensive, which could leave room for further gains if earnings continue to grow.
Lilly looks particularly compelling. The stock has already outperformed the S&P 500 this year. It trades at just over 29 times forward earnings, or roughly 1.5 times the S&P 500's multiple of about 20 times. That compares with a roughly two-times midpoint for Lilly's relative valuation over the past three years. If Lilly delivers the earnings growth Wall Street expects, that valuation could give the stock further room to run.
Analysts expect Lilly's revenue to grow about 20% annually from 2025 through 2028, reaching $113.7 billion, according to FactSet. Its booming GLP-1 franchise is a major driver, but Lilly also has a sizable oncology business. Analysts expect oncology sales of more than $10 billion this year, compared with $88.3 billion in expected companywide revenue.
Wall Street expects Lilly's earnings per share to grow about 30% annually through 2028. Continued share repurchases could provide an additional boost to per-share earnings.
In this market, Lilly-and the other names on Wolfe's list-look well positioned to pass investors' test.
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