Goldman lists its top 25 tactical trades for earnings season

Goldman Sachs has released a list of 25 of its top tactical stock picks for over the next three months of earnings.

The list consists of the 25 most out-of-consensus opportunities from its Americas coverage. Goldman analysts see potential for upward earnings revisions to bolster upside in 17 stocks. It also sees downward profit revisions to drive downside in eight stocks.

“Single stock options volumes have declined over the past month, suggesting that retail and hedge fund traders are less excited about near-term upside asymmetry,” John Marshall, head of Goldman Sachs’ derivatives research division, said in the note Thursday. “With less chance for an upside squeeze, we expect hedge funds to increase short positions in fundamentally weak companies in the coming days.”

The firm’s analysts project 9% upside to the average S&P 500 (SP500)(SPY)(IVV) stock over the next 12 months, which is 2% lower than last quarter.

Here’s the list, starting with 17 companies with potential to see upside to earnings estimates. For the entire list, the options chosen are the monthly expiry that is closest to the first out of the money calls and puts.

Buy calls on the stocks below at month and strike listed:

• Aramark (ARMK) – Earnings date: Aug. 8 – Options: August, strike at 33, and 3.1% cost.
• Chipotle Mexican (CMG) – Earnings date: July 24 – Options: August, strike at 60, and 4.5% cost.
• Installed Building (IBP) – Earnings date: Aug. 2 – Options: August, strike at 220.00, and 4.6% cost.
• Starbucks (SBUX) – Earnings date: Aug. 1 – Options: August, strike at 75.00, and 3.8% cost.
• Enphase Energy (ENPH) – Earnings date: July 23 – Options: August, strike at 110, and 8.7% cost.
• Allstate (ALL) – Earnings date: July 31 – Options: August, strike at 160.00, and 3.6% cost.
• Intercontinental (ICE) – Earnings date: Aug. 1 – Options: August, strike at 145.00, and 2.4% cost.
• Intuitive Surgical (ISRG) – Earnings date: July 18 – Options: July, strike at 450.00, and 2.5% cost.
• Woodward (WWD) – Earnings date: July 31 – Options: August, strike at 180.00, and 4.0% cost.
• Affirm Holdings (AFRM) – Earnings date: Aug. 23 – Options: September, strike at 30.00, and 10.8% cost.
• Brink’s Co. (BCO) – Earnings date: Aug. 9 – Options: August, strike at 110.00, and 1.2% cost.
• Fox (FOXA) – Earnings date: Aug. 8 – Options: August, strike at 36.00, and 2.8% cost.
• Guidewire Software (GWRE) – Earnings date: Sept. 6 – Options: October, strike at 140.00, and 7.2% cost.
• Microsoft (MSFT) – Earnings date: July 25 – Options: August, strike at 470.00, and 3.0% cost.
• Teradyne (TER) – Earnings date: July 26 – Options: August, strike at 160.00, and 5.4% cost.
• Vertex (VERX) – Earnings date: Aug. 9 – Options: August, strike at 40.00, at 4.6% cost.
• Bank of New York (BK) Earnings date: released July 12 – Options: July, strike at 62.50, at 0.8% cost.

Eight stocks with potential for downside to estimates. Buy puts on the stocks below at the month and strike price listed:

• Mister Car Wash (MCW) – Earnings date: Aug. 2 – Options: August, strike at 5.00, and 3.8% cost.
• Victoria’s Secret (VSCO) – Earnings date: Aug. 30 – Options: September, strike at 18.00, and 8.3% cost.
• NOV Inc. (NOV) – Earnings date: July 25 – Options: August, strike at 17.00, and 2.2% cost.
• Lazard (LAZ) – Earnings date: July 25 – Options: August, strike at 39.00, and 4.3% cost.
• Louisiana-Pacific (LPX) – Earnings date: Aug. 7 – Options: August, strike at 80.00, and 4.1% cost.
• Murphy USA (MUSA) – Earnings date: July 31 – Options: August, strike at 460.00, and 3.8% cost.
• Boston Beer (SAM) – Earnings date: July 25 – Options: August, strike at 280.00, and 4.7% cost.
• eBay (EBAY) – Earnings date: July 26 – Options: August, strike at 52.50, and 3.4% cost.