Do you like to look for contrarian opportunities in the stock market? If so, we ran a screen you may be interested in.
We began by screening for stocks reporting their second-quarter earnings next week for those with bearish sentiment, with float shorts above 10%.
We then screened for those with strong profitability compared to industry peers, with higher gross, operating, and pretax margins than their industry averages by at least 5% on each margin. This indicates that these companies are taking a greater percentage of their revenues as profits, and they also have stronger control over their cost structures.
For an interactive version of this chart, click on the image below. Market cap data sourced from Zacks Investment Research.
Tool provided by Kapitall (kapitall.com).
Do you think these stocks could positively surprise the market? Use this list as a starting point for your own analysis.
List sorted by difference between pretax margin and industry average.
1. InterDigital, Inc. (IDCC): Engages in the design and development of digital wireless technology solutions. Market cap at $1.2B, most recent closing price at $27.13. Float short at 14.61%. Earnings to be released on 07/23. TTM gross margin at 100.% vs. industry average at 60.72%. TTM operating margin at 39.94% vs. industry average at 20.33%. TTM pretax margin at 35.86% vs. industry average at 20.62%.
2. Texas Capital BancShares Inc. (TCBI): Operates as the holding company for Texas Capital Bank, National Association that provides various banking products and services for commercial and high net worth customers in Texas. Market cap at $1.62B, most recent closing price at $42.69. Float short at 15.42%. Earnings to be released on 07/25. TTM gross margin at 88.91% vs. industry average at 72.86%. TTM operating margin at 55.75% vs. industry average at 39.95%. TTM pretax margin at 37.62% vs. industry average at 23.91%.
3. Crown Media Holdings Inc. (CRWN): Owns and operates pay television channels in the United States and Puerto Rico. Market cap at $640.23M, most recent closing price at $1.78. Float short at 12.61%. Earnings to be released on 07/27. TTM gross margin at 55.02% vs. industry average at 41.25%. TTM operating margin at 35.41% vs. industry average at 19.22%. TTM pretax margin at 25.04% vs. industry average at 14.52%.
*Profitability data sourced from Fidelity, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.