1/19/2018
By Charles Payne, CEO & Principal Analyst

It’s been a heck of a year for the stock market so far; however, I think it’s just getting started.  

There is a tremendous excitement about this earnngs season and results, and more importantly, guidance.  After a decided move lower, corporate earnings are gaining strength as each quarter gathers additional strength.

It’s not only the new tax rates that have investors optimistic, but it’s also a groundswell of excitement about the economy. In fact, it’s all the talk about who gets credit for the economic revival in this country; according to Quinnipiac Polling, folks are saying the “Nation’s Economy is Excellent.” The economy recently took off like a rocket to 18% this month from just 2% in December 2016.

The best barometer of optimism (and this isn’t just a feeling I have) is the top line of the income statement. After a major lull in year-to-year growth, revenues have begun to take off; I’m looking for this to continue.

According to FactSet Data, the Street already had high expectations for revenue and earnings growth, but I think these numbers are far too low:

• For Q1 2018: analysts are projecting an earnings growth of 14.1% and a revenue growth of 7.1%
• For Q2 2018: analysts are projecting an earnings growth of 13.9% and a revenue growth of 7.0%
• For Q3 2018: analysts are projecting an earnings growth of 15.2% and a revenue growth of 5.8%
• For Q4 2018: analysts are projecting an earnings growth of 15.1% and a revenue growth of 4.5%

For all of 2018, analysts are projecting an earnings growth of 14.7% and a revenue growth of 5.9%.

With this being said, stop fretting about an eventual pullback. Consider the fact that the economy has moved from a survival-and-recovery mode to a growth mode (a condition that feeds itself and doesn’t disappear overnight -neither should this rally).

Charles Payne
Wall Street Strategies

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