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VIDEO: Sectors to Avoid During Q4 Earnings

I talked with David Asman and Liz Claman over at Fox Business Network on Jan. 15. Three sectors he’s worried about for this Q4 earnings season are healthcare, IT and materials.

This is riffing on my recent post about sectors to avoid this earnings season, based on FactSet information on earnings estimates. To be clear, there still is growth generally for EPS figures and specifically for many segments of the market that are on the mend (housing immediately springs to mind).

However, the bar has been lowered significantly for several sectors — including tech plays Intel (NASDAQ:INTC) and Advanced Micro Devices (NYSE:AMD), pharma stocks like Pfizer (NYSE:PFE) and Teva (NYSE:TEVA), and materials stocks like Alcoa (NYSE:AA) that beat … but did so by stepping over an incredibly low bar.

One thing I’d like to make clear that the video perhaps did not is that these are reductions in forecasts — not a sign these companies won’t make money. If estimates go from $1.50 to $1.25, however, it’s safe to say things look troubling for the stock in question.

Furthermore, the nature of earnings is inherently backward-looking. Remember, Q4 earnings reflect conditions in October, November and December. So if a certain company has seen a big lift since Thanksgiving … well, it might not be wholly reflected in the reports. But that doesn’t mean you should discount all earnings data as antiquated because it is often directionally accurate.

Keep this perspective and timeframe in mind.

Check out the full article here for more, because five minutes is hardly enough to cover a topic like this in full detail.

And if you’re wondering about Apple (NASDAQ:AAPL) earnings like everyone else, skip to the 4-minute mark.

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he held a long position in Apple, Intel and Alcoa.

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Comments
  • Hendrick

    I think the best thing about watching this squirrel go on live TV to give finance ‘advice’ is that he’s some sort of liberal arts major who STILL whines about having student debt for his no-name lit degree (art history? journalism?). Yeah, brilliant guy who clearly benefits from all the ‘insights’ he dispenses. Maybe if you keep hawking HerbaLife and AAPL they’ll finally slip you some under the table.

    This entire blog is embarrassing.