7 Stocks to Buy (or Sell) Ahead of February Earnings

Credits: Unsplash

By: Aquib Nawab


Earnings season's significance for directional trades is undeniable. Watch before earnings to gain insights into the market landscape. Despite the S&P 500 reaching all-time highs, collective earnings have shown a 1.4% year-over-year (YoY) decline, hinting at market uncertainty.


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Palantir emerges as a compelling Buy due to its consistent profitability. Analysts predict an impressive YoY EPS growth of 100%. Its strong AI offerings and eligibility for inclusion in the S&P 500 set it apart from the competition. Palantir is already larger, by market cap, than 3/5 of the current index holdings.

1 - Buy - Palantir (PLTR)

Credits: Wall Street Journal

2 - Sell - Chipotle (CMG)

Chipotle faces shifting consumer sentiment, with growing dissatisfaction over slow and incorrect orders, ingredient quality, and perceived declines in service quality. This negative sentiment, coupled with high ratios (trading at 55x earnings and 22x book value) and a declining EPS growth trend, suggests that it may be prudent to Sell.

Credits: Palm Springs

McDonald’s remains an attractive Buy option, backed by bullish sentiments from top analysts. It is considered a top pick in the restaurant industry, offering resilience in uncertain economic conditions. Expected 7% EPS growth and 9% revenue growth further support its appeal. The stock has climbed just under 8% over the preceding 12 months.

3 - Buy - McDonald’s (MCD)

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Despite ambitions to "shock the world," PayPal's recent innovations, such as biometric checkout procedures, underwhelmed. Although it dominates the market share, competition is increasing, especially in the mobile sector, making it vulnerable. Shares dipped slightly after the underwhelming Innovation Day proceedings.

4 - Sell - PayPal (PYPL)

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5 - Buy - Apple (AAPL)

Apple's emphasis on services, including Apple Pay and podcasting, positions it as a Buy. Apple Pay's impressive statistics, with a 92% share of the digital wallet marketplace, processing 12.6% of all online consumer payments in 2023, and 48% of customers using the digital wallet for in-person transactions, signal long-term strength. The stock climbed just under 8% over the preceding 12 months.

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Labeling Alibaba Group as a Sell is challenging. While its per-share price is nearing its IPO debut cost and it is not a short-lived success, economic risks in China pose a significant threat. Competition, especially from Pinduoduo, is eroding its market share, and supply chain disruptions add to the pressure. The stock is worth just a third of its 2020 high.

6 - Sell - Alibaba Group (BABA)

Credits: Tech Crunch

Buy now, pay later (BNPL) model, faces challenges. Rising credit card delinquency rates suggest an impending surge in unpaid BNPL loans. The company's increased allowance for credit losses, which surged by over 10% year-over-year, further dims its short-term outlook. The stock surged more than 185% over the past year but may be in a bubble.

7 - Sell - Affirm Holdings (AFRM)

Credits: Bloomberg

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