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5 Rocket Stocks to Buy Ahead of Earnings Season

Tickers in this article: LULU PII TXT AME SNY
BALTIMORE ( Stockpickr) -- Three down, one to go for 2012. The end of the third quarter may have come and gone rather unceremoniously, but it means something important for investors: earnings season is right around the corner. Officially, corporate earnings kick off a week from tomorrow with Alcoa's (AA) third-quarter numbers.

That spurt of fundamental data is a big deal for stocks. Generally, investors get just four big data points per year, one every quarter. So it's no big surprise that stock prices can react in a big way to earnings surprises, be they positive or negative.

>>5 Stocks Under $10 Set to Soar Fundamentally, there are still a lot of bargain stocks out there. The average P/E ratio for the S&P 500 is still holding lower than it's been anytime since 1990, and a number of dividend metrics offer equity buyers similar stats right now. More positive data over the course of earnings season could be just the spark stocks need to keep the rally going into the end of the year. That's why we're looking at a brand new set of Rocket Stocks this week... For the uninitiated, "Rocket Stocks" are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows.

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In the last 170 weeks, our weekly list of five plays has outperformed the S&P 500 by 76.69%.

Without further ado, here's a look at this week's Rocket Stocks .


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First up is French drug maker Sanofi (SNY) . While shares of Sanofi have gotten knocked around by the recent drama in the EU, this stock is still faring well against the S&P 500 this year -- the stock is up close to 18% since the first trading day in January. Now, with analyst sentiment on the upswing, we're betting on shares.

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Sanofi is one of the big pharma names with the lease exposure to the U.S. Only around 30% of the firm's sales are generated stateside, with another 30% earned in the EU. That diversified income statement is a good thing for SNY shareholders because it reduces the potential for regulatory headwinds that could impact sales of SNY's drug portfolio. Hefty exposure to emerging markets also bodes very well for Sanofi shareholders, given the pace that developing countries are consuming new drug treatments.