Five stocks to buy before they report earnings

There’s still plenty of buying opportunities left before companies report their latest earnings, according to Bank of America. The Wall Street investment bank sees a host of companies whose stocks have room to appreciate. CNBC Pro combed through Bank of America research to find buy-rated stocks that the bank argues are a must own heading into their quarterly results. They include: DraftKings, Duolingo , Fox Corp. , Yum China and Bilibili. Fox Corporation Analyst Jessica Reif Ehrlich sees several positive catalysts ahead, led by political coverage. The bank says election season is driving robust growth at the news media and sports company. Fox’s “portfolio of sports and news has positioned the company well to weather the accelerating secular headwinds in the linear ecosystem relative to peers,” she said. Another underappreciated catalyst, according to Bank of America, is that Fox is the broadcaster of the 2025 Super Bowl. “Looking ahead to F3Q, indications are that Super Bowl demand is extremely strong and [advertising] inventory is almost sold out,” she said. Shares of the company are up more than 41% year to date. Earnings are scheduled to be reported before the market open on Monday, Nov. 4. “We believe Fox is well-positioned in FY25 and should benefit from: an improving advertising backdrop and a healthy balance sheet,” Reif Ehrlich wrote. Duolingo Shares of the online language learning company are up 29% this year, but the stock has plenty more room to run, according to analyst Curtis Nagle. The bank sees revenue upside heading into Duolingo’s earnings release postmarket on Wednesday, Nov. 6. “3Q setting up for another strong beat,” Nagle wrote. Expectations are, however, elevated, Nagle wrote, which could make the stock volatile, but Bank of America said investors should still buy the stock. Nagle said there is still a lot to like about Duolingo, including its “category leadership, differentiated (gamified) offering, strong execution and sticky and rapidly growing user base.” “With that said, Duolingo is one of the highest growth companies within Internet and we remain positive on the opportunity for continued earnings upside,” he went on. Yum China The restaurant holding company and owner of brands such as KFC in the People’s Republic of China is firing on all cylinders. Analyst Chen Luo says channel checks indicate Yum China’s internal measures are leaving it well positioned to navigate a bumpy China macroeconomic environment. In particular, Bank of America says Yum China is using a healthy dose of promotions in addition to store expansion, buybacks and cost controls. Luo admitted that competition in China remains robust, but says the company is up to the challenge. “However, we observe that McDonald’s expansion in Shanghai (YUMC’s headquarters) might be behind the schedule in 2024, due to KFC’s aggressive expansion and fierce local competition in Shanghai,” he added. Meanwhile shares are up about 6% this year ahead of the company’s third-quarter earnings report on Monday, Nov. 4. “Our channel checks with industry consultants and market researchers reaffirm our view that YUMC’s self-help could help to better weather the storm with margin and [same-store sales growth] inflections,” the analyst said. Fox “Looking ahead to F3Q, indications are that Super Bowl demand is extremely strong and [advertising] inventory is almost sold out. … Fox’s portfolio of sports and news has positioned the company well to weather the accelerating secular headwinds in the linear ecosystem relative to peers. … We believe Fox is well- positioned in FY25 and should benefit from: (1) an improving advertising backdrop and (2) a healthy balance sheet.” Yum China “Our channel checks with industry consultants & market researchers reaffirm our view that YUMC’s self-help could help to better weather the storm with margin & SSSG inflections. … However, we observe that McDonald’s expansion in Shanghai (YUMC’s headquarter) might be behind the schedule in 2024, due to KFC’s aggressive expansion and fierce local competition in Shanghai.” Bilibili “We expect Bilibili to report 3Q results in mid-Nov. and see a likely beat in results with a positive 4Q outlook. We see on-track key business trends, given 1) better game business growth amid the strong performance of new game – Sanmou. … We see a better monetization outlook amid macro recovery and resumption of game approval licensing.” Duolingo “While we expect another beat and raise quarter in 3Q, expectations are high going into the quarter which could add some near-term volatility risk to shares. … With that said, DUOL is one of the highest growth companies within Internet and we remain positive on the opportunity for continued earnings upside.” DraftKings “DraftKings is set to report Q3 earnings on Thursday November 7. … Based on our conversations, it’s our sense investors expect DKNG to reiterate their FY25 EBITDA guide of $900M-1B and guide to mid-20%s revenue growth. … We rate DKNG a Buy given positive underlying fundamentals, above market revenue growth profile and inflection to positive Adj. EBITDA.”