Companies like Walmart and Apple could be among the most reliable plays during earnings season, according to Wolfe Research. The third-quarter earnings season is kicking off this week, with major consumer and financial names set to post their latest financial reports. Analysts lowered their EPS estimates in aggregate by a larger margin compared to recent averages during the third quarter, but S & P 500 earnings year-over-year are still estimated to grow 4.2% during the period — which would mark the fifth straight quarter of year-over-year earnings growth for the broader market. Against this backdrop — and with inflation still being a key risk for stocks — according to the firm, chief investment strategist Chris Senyek searched for stocks that have performed well when releasing quarterly financial reports. The firm screened the S & P 500 for companies that have beat on the top- and bottom-lines with positive relative price action around their earnings reports over the past two quarters. Take a look at some of the stocks below that fit this criteria: Walmart is a strong earnings play and also a Wolfe favorite, as the stock recently made the firm’s October “Alpha list” with an outperform rating. “We think WMT can benefit in either a worsened or improved macro environment, either via further share gains or improved consumer spending on discretionary products,” Wolfe analyst Greg Badishkanian wrote in an Oct. 1 note. “We also see a longer-term opportunity for margin expansion from advertising, marketplace, and fulfillment services.” Badishkanian added that Walmart’s prices are substantially cheaper than traditional grocers and able to compete with hard discounters through private label offerings. His $89 price target on Walmart shares implies about 12.3% potential upside. The stock has a price-to-earnings ratio of 33.3, according to the screener. TJX Companies made the cut alongside several consumer discretionary stocks. Shares of the discount retailer have jumped 19.6% year to date, in line with the S & P 500’s returns this year. Wolfe likes the sector as it sees continued consumer strength. “We continue to see U.S. consumer spending as remaining resilient driven by the wealth effect and higher earners’ spending,” Senyek wrote in a Sept. 25 note, pointing to TJX’s total return this year and its roughly 1% contribution to the SPDR Discretionary ETF. “Investors will have opportunities to find value within the sector as the market broadens out to year end.” Apple was the only Big Tech name that made Senyek’s screener. The stock has a price-to-earnings ratio of 32.9 and a free cash flow yield of 3%. Apple shares are up 15.5% this year, but the iPhone maker shed nearly 2% on Monday after Jefferies analysts downgraded shares to hold from buy. The firm said its P/E ratio for the current fiscal year is near an all-time high, and that near-term expectations for the iPhone 16 and 17 are too high given weaker-than-expected initial demand. Apple’s “smartphone hardware needs rework before being capable of serious AI, with likely timeline of 2026/27,” the firm added. Other stocks with strong performance around their earnings reports include cereal maker Kellanova , ON Semiconductor and Morgan Stanley .
