A large majority of the companies have already reported second-quarter results. While we can call it a mixed earnings season, there are a few companies that beat expectations and reported record revenue and profits. These earnings winners have proved their strength and are ready for a stellar second half of the year.
I’ve identified three stocks that are on the rise after reporting impressive second-quarter results. These three companies have a lot of potential to keep the momentum going and their numbers prove that they are the best in their respective industries. While one quarter is never enough to judge a company, these three companies have reported impressive numbers over the past few quarters and are already on strong momentum.
Investors who already own these stocks should keep holding on to them for steady gains and those who don’t might want to consider buying before they skyrocket. Let’s take a look at the three stocks to buy.
Earnings Winners: Spotify (SPOT)
Earlier in July, I’d written that Spotify (NYSE:SPOT) will dominate the second half of 2024 and its quarterly earnings have proved me right. A hot social media stock, Spotify has been running high since it reported a record profit in the second quarter.
The music streaming company with a strong global presence has reported impressive numbers and saw a 20% year-over-year jump in revenue to 3.8 billion euros. It managed to see a strong improvement in profit through the cost-cutting measures including a drop in personnel costs.
Its gross margin improved to 29.2% and the management hopes to maintain the same momentum in the third quarter. I believe Spotify is a long-term industry player and investors need to keep in mind that it is growing its subscribers at a rapid pace.
In the quarter, the total subscribers jumped by 12% YOY to 246 million and the monthly active users soared 14% to 626 million. The management is hopeful about adding another 13 million monthly active users in addition to 5 million premium subscribers. It is investing in artificial intelligence (AI) to improve its platform and enhance consumer experience.
Trading at $339, the stock is up 80% year-to-date and 143% in the past 12 months. Investors holding SPOT stock should not rush to sell it since it is nearing a 52-week high. This stock has the potential to keep moving higher and several analysts have a bullish sentiment for it. Spotify is one of the best earnings winners to own.
Eli Lilly (LLY)
Pharmaceutical company Eli Lilly (NYSE:LLY) reported a blow-out quarter and raised the guidance. The company is making the most of the rising demand for its weight loss drugs, Zepbound and Mounjaro.
It saw a revenue of $11.30 billion, up 36% YOY and the EPS reached $3.92. The growth was driven by the massive demand for Zepbound which recorded $1.24 billion in sales and Mounjaro which brought in $3.09 billion.
The management is now aiming for full-year earnings in the range of $16.10 to $16.60 per share, up from the prior guidance of $13.50 to $14 per share. It is aiming for revenue between $45.40 to $46.60 billion.
Since 2020, the company has committed over $16 billion for the development of manufacturing facilities in Europe and the U.S. In May, the company announced that it increased the investment in the Lebanon site with a commitment of $5.3 billion and took the total investment for the site to $9 billion. This will help improve its capacity to make ingredients for Mounjaro and Zepbound.
Trading at $891, the stock is up 50% YTD and 65% over the past 12 months. I’d recommended buying the stock before it reports earnings when it was trading for $804. If you’d bought it then, you’d be sitting on 11% gains. The high price of the stock also makes it an ideal stock split candidate.
Netflix (NFLX)
Streaming giant Netflix (NASDAQ:NFLX), one of the top earnings winners is a household name today. Up 35% YTD, the stock is trading for $633 today and is moving towards the 52-week high of $697.
While this business needs no introduction, its success lies in its strong fundamentals. In the second quarter, Netflix saw a sales of $9.56 billion and an EPS of $4.88. Additionally, its memberships grew 16.5% to 277.65 million members at the end of the second quarter.
Netflix will no longer report membership numbers starting next year but will disclose important metrics when essential. Despite a high inflation environment and low consumer spending, Netflix has been able to impress the market with a strong performance.
The revenue surge was driven by a 34% jump in the ad-supported memberships. Netflix is clearly thriving from the advertising segment and with an ad-supported tier, it can enjoy a steady flow of income. Subscribers for the ad-supported tier account for more than 45% of the signups.
The global giant is at the forefront of the streaming industry and continues to churn out new content that attracts users. Its crackdown on password sharing has also paid off. After a stellar quarter, the management raised the full-year guidance and is aiming for revenue growth of 14% to 15%.
Netflix has also added live sports to its offerings and will stream NFL games on Christmas for the next three years. It will continue to attract users and more ad money.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.