Second-quarter results across have been a mixed bag, but generally positive. So far, 80% of companies listed in the S&P 500 index have reported better-than-expected earnings, according to data tracked by FactSet. That’s pretty good, especially since Q2 was forecast to be the trough for earnings this year. The second half of 2023 is expected to be much stronger. While a majority of companies beat estimates, some hit home runs, knocking the leather off the ball with their Q2 prints. In most cases, the stocks of these companies have risen sharply higher on the backs of strong earnings announcements. This portends good things for the companies as we move into the autumn. It also presents an opportunity for investors to capitalize on the strong performance. That an economic recession has yet to materialize is also good news. Here are seven stocks to snag after smashing Q2 earnings.
Molson Coors (TAP)
Molson Coors (NYSE:TAP) crushed its second-quarter financial results, reporting that its net income in the April through June period rose 624% from a year earlier to $342.4 million. The brewer, whose popular beer brands include Miller Lite and Blue Moon, said its net income in Q2 equated to $1.57 a share, up more than 600% from 22 cents a year earlier. The profit increase was driven by higher sales, which totaled $3.3 billion in Q2, up 14% from $2.9 billion in the same period of 2022.
The company said sales volumes grew in its three largest markets: the U.S., Canada, and the United Kingdom, including its best sales growth in America since 2008. In terms of forward guidance, Molson Coors said it now expects an increase in its net income for all of this year in a range of 23% to 26%, up from a previous forecast of growth in the low single digits. TAP stock has gained 35% so far this year as its sales and profits accelerate now that we have put the pandemic in our collective rearview mirror.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) Q2 earnings beat Wall Street forecasts on both the top and bottom lines. That was despite the company announcing an 18% decline in its revenue due to a continued slump in personal computer sales. AMD also reported earnings per share of 58 cents versus 57 cents which was expected. Revenue in the quarter totaled $5.36 billion compared to $5.31 billion that was forecast.
Looking ahead, AMD said it expects $5.70 billion in Q3 sales, which is lower than the $5.81 billion that analysts had been looking for. AMD said its processor business continues to slow because of a decline in the global PC market. Still, AMD is one of only a few companies making high-end chips for artificial intelligence applications. The company said on its Q2 earnings call that it’s increasing its AI-related research and development spending and plans to focus increasingly on AI chips and software. AMD stock is up 74% year to date.
Intel (INTC)
Intel (NASDAQ:INTC) jumped 7% after it announced that it returned to profitability during Q2, That was after two consecutive quarters of steep financial losses. Specifically, Intel reported EPS of 13 cents compared to a loss of 3 cents that had been forecast among analysts on Wall Street. Revenue during Q2 came in at $12.90 billion versus $12.13 billion which had been expected.
For Q3, Intel is forecasting earnings of 20 cents a share on revenue of $13.40 billion. That’s better than consensus expectations for 16 cents a share on $13.23 billion in revenue. Intel’s gross margin in Q2 was nearly 40%, topping 37.50% a year ago. The strong Q2 print comes after Intel reported two straight quarters of financial losses, including the biggest loss in the company’s 55-year history in Q1 of this year. INTC stock has been recovering lately and is now up 30% on the year.
Coca-Cola (KO)
Coca-Cola (NYSE:KO) remains a rock-solid investment. The company just reported better-than-expected Q2 results and raised its forward guidance for the remainder of this year. The soft drink maker announced EPS of 78 cents versus 72 cents which was the consensus forecast on The Street. Revenue in the quarter ended June 30 totaled $11.97 billion compared to $11.75 billion which was forecast among professional analysts.
Coca-Cola lifted its guidance for the remainder of 2023. It now expects EPS growth of 5% to 6%, up from a previous forecast of 4% to 5%. The company also raised its outlook for its revenue growth, predicting an increase of 8% to 9%, up from 7% to 8%. Coke attributed the beat and raise to price increases on its products that were made in response to inflation. KO stock is down a slight 1% this year, though it has gained more than 30% over the last five years. The stock also pays a strong dividend that yields nearly 3%.
Bank of America (BAC)
With a few exceptions, banks reported solid earnings for this year’s second quarter. One of the standout prints came from Bank of America (NYSE:BAC). The second-largest lender in America beat expectations on both the top and bottom lines. All thanks to a surge in interest rate income. It also reported EPS of 88 cents versus 84 cents which was expected. Revenue for the quarter came in at $25.33 billion compared to $25.05 billion that had been forecast.
Bank of America’s strong financials were due primarily to higher interest rates charged on commercial and consumer loans. The lender did warn that its loan and deposit growth has slowed in recent weeks as the U.S. economy begins to cool due to elevated interest rates. But long-term, the bank sees continued growth ahead. BAC stock has pulled back 7% this year, but the retreat is due to several regional banks collapsing this past spring. Investors should view the current dip as a serious buying opportunity.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT), whose Q2 earnings were largely misunderstood, beat forecasts on the top and bottom lines. However, MSFT stock fell 4% after the company issued revenue guidance that disappointed many people. For Q2, Microsoft announced EPS of $2.69, which was better than the $2.55 consensus expectation of analysts. Revenue came in at $56.19 billion compared to $55.47 billion that was anticipated.
Microsoft sank on news that the company expects revenue for the current quarter of $53.80 billion to $54.80 billion. That guidance was short of the $54.94 billion consensus view on Wall Street. Also weighing on the share price is Microsoft’s $68 billion acquisition of Activision Blizzard (NASDAQ:ATVI). Importantly, Microsoft continues to roll out new AI products as it builds on its partnership with the privately held company OpenAI.
American Airlines (AAL)
American Airlines (NASDAQ:AAL) reported exceptional Q2 earnings as travel demand skyrocketed. The company announced EPS of $1.92 versus the $1.59 which was expected by analysts. Revenue in Q2 totaled $14.06 billion compared to $13.74 billion that had been forecast on Wall Street, according to Refinitiv data. The revenue print was a record for American Airlines and up 4.7% from a year earlier. The company’s flying capacity rose 5.3% in Q2 from a year ago.
American Airlines also raised its forward guidance for all of 2023, saying it expects the current travel boom to continue throughout this year’s second half and into 2024. American Airlines’ strong Q2 results come after rival carriers also announced strong earnings due to strengthening travel demand. Industry forecasts have called for U.S. airlines to carry a record 257 million passengers this summer between June 1 and August 31. AAL stock has gained 25% this year but remains well below its pre-pandemic peak.
On the date of publication, Joel Baglole held long positions in BAC and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
