3 More Stocks to Buy After Earnings
These wide-moat stocks with recent fair value increases look attractive.
Susan Dziubinski: Hi. I’m Susan Dziubinski, co-host of The Morning Filter podcast. On a recent episode, Morningstar’s chief US market strategist, Dave Sekera, discussed four stocks to buy after earnings. All four stocks looked undervalued according to Morningstar. To see what Dave’s picks were, click the link below this video. Today, we’re covering three more stocks that look like buys after earnings. They’re all wide-moat stocks that Morningstar’s analysts increased their fair value estimates on after earnings, and they all look undervalued today.
3 More Stocks to Buy After Earnings
Our first additional stock to buy after earnings is Arista Networks. We view the company as the technology leader in high-speed switching for enterprise networking. We think Arista has carved out a wide economic moat based on intangible assets in high-speed networking and customer switching costs. Morningstar raised its fair value estimate on the stock to $190 from $175 after earnings, driven by a stronger forecast for high-speed data center revenue growth over the next three years. The stock looks undervalued relative to our fair value.
Read Morningstar’s full report on Arista Networks.
The second extra stock to buy after earnings is Charles Schwab. We think Schwab has carved out a wide economic moat thanks to a durable cost advantage. Schwab has done an excellent job of deepening its customer relationships by building a robust, intuitive trading and advisory platform with an ever-expanding menu of services, and we think there’s more room to grow. Morningstar inched up its fair value estimate on the stock to $114 from $111 after earnings due to quarterly outperformance and a more constructive short-term interest rate environment. Shares trade well below fair value.
Read Morningstar’s full report on Charles Schwab.
The final stock to buy after earnings is Northrop Grumman. The defense contractor has carved out a wide economic moat and currently enjoys exposure to some big military development programs that are early in their lifecycle. We think Northrop is well-positioned to meet growing demand for space, missiles, and aircraft systems. Morningstar increased its fair value estimate on the stock to $640 from $630 after earnings, primarily due to a slight increase in our aeronautics forecast. The stock is trading below fair value.
Read Morningstar’s full report on Northrop Grumman.
For more stock ideas, be sure to tune into The Morning Filter each week, wherever you get your podcasts, and visit Morningstar.com too.
Morningstar director Sean Dunlop, senior analyst William Kerwin, and analyst Nicolas Owens provided the research behind this segment.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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