Why Investors Need to Take Advantage of These 2 Retail and Wholesale Stocks Now

Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.

The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

The Zacks Earnings ESP, Explained

The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.

The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.

Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.

Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.

Should You Consider Target?

The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Target (TGT) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $2.19 a share 29 days away from its upcoming earnings release on March 3, 2026.

Target's Earnings ESP sits at +1.27%, which, as explained above, is calculated by taking the percentage difference between the $2.19 Most Accurate Estimate and the Zacks Consensus Estimate of $2.16. TGT is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

TGT is part of a big group of Retail and Wholesale stocks that boast a positive ESP, and investors may want to take a look at Abercrombie & Fitch (ANF) as well.

Abercrombie & Fitch, which is readying to report earnings on March 4, 2026, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $3.58 a share, and ANF is 30 days out from its next earnings report.

The Zacks Consensus Estimate for Abercrombie & Fitch is $3.56, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.37%.

Because both stocks hold a positive Earnings ESP, TGT and ANF could potentially post earnings beats in their next reports.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

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This article originally published on Zacks Investment Research (zacks.com).

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