The fourth-quarter earnings season not only looks weak, but is also stuck in a web of global political and economic woes. The acceleration seen in economic growth is limited only to the U.S. as global growth is clearly in jeopardy. Both the S&P 500 (SPX) and Dow Jones have lately been in the red, losing 1.9% and 1.7%, respectively, year to date.

This is especially true as oil price is not showing any sign of a rebound, speculations of Greece departing from Eurozone are rife, and the Swiss bank surprisingly abandoned its currency cap spreading jitters across the globe. Further, sluggish data from China, global economic growth concerns and hopes of a big stimulus from European Central Bank (ECB) have kept the market highly volatile.

In such a backdrop, investors could definitely take advantage of the beaten down stock prices to profit from the Q4 earnings season and may look to the sectors that are grabbing attention in 2015.

Here, we focus on three hot sectors: industrial products, retail and, of course, energy. All these have lately taken a hit and are thus cheaper than many other sectors. The stocks in these popular sectors are also expected to post stronger earnings in Q4.

Zeroing in on the stocks of these in-focus sectors that have a high chance of surprising in their upcoming release and have seen their prices sliding lately would therefore be a good idea to play this earnings season.

How to Choose Stocks?

Earnings beat will definitely inspire investor confidence and propel the price of these sector stocks higher. Picking the star performers would be easy if we go by our proprietary methodology that selects stocks with a combination of a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP.
 
Earnings ESP is our proprietary methodology for identifying stocks that have the maximum chance to surprise with their upcoming earnings announcements. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.

Below, we have highlighted three beaten down stocks from the hottest sectors that will likely deliver an earnings beat when their results are released in the coming weeks. The outperformance would drive the share price higher, resulting in above-market returns.

Industrial Products
 

One corner of this space – industrial metals -- saw a broad sell-off last week triggered by the copper meltdown as the World Bank lowered its 2015 global growth forecast to 3% from 3.4%. The bank cited ongoing sluggishness in China – the world’s biggest consumer of copper, sluggishness in the Eurozone and Japan, as well as weakness in key emerging markets like Russia, Brazil and China as the reasons for its downward revision.

In this environment, Noranda Aluminum Holding Corp. (NOR - Snapshot Report), having a Zacks Rank #1 and Earnings ESP of 50%, seems exciting great pick. The company has seen its estimates rising by 2 cents to 10 cents over the past seven days, representing a substantial 183.3% year-over-year growth. In addition, it delivered positive earnings surprises in two of the last four quarters, with an average beat of 17.31%. Shares of NOR are down over 12% in the year-to-date period, suggesting a good buying opportunity on expectations of a bullish momentum over the coming weeks.

Based in Franklin, TN, Noranda Aluminum is a leading North American integrated producer of primary aluminum products and high-quality rolled aluminum coils. The company is scheduled to report earnings on Feb 18 (read: Why Noranda Aluminum Could Be a Top Value Stock Pick).

Retail

While weak December retail sales data baffled many retailers, overall holiday sales (November and December) – up 4% to $616.1 billion and in-line with the National Retail Federation (NRF) – reached their highest level since 2011. Notably, retail sales dipped 0.9% in December, marking the largest monthly decline in almost a year, followed by an increase of 0.4% in November.

The solid holiday numbers will definitely boost earnings for retailers, making them attractive at present. Among these, BJ's Restaurants Inc. (BJRI - Analyst Report) with a Zacks Rank #1 and Earnings ESP of 4.76% seems to be a solid pick. The current Zacks Consensus Estimate for the fourth quarter – up by a penny over the past 30 days to 21 cents – suggests a whopping 244.44% increase from the year-ago quarter. The stock delivered positive earnings surprises in the last four quarters, with an average beat of 33.81% and is down nearly 12% year to date.

Based in Huntington Beach, CA, BJ's Restaurants is the owner and operator of casual dining restaurants in the Unites States. It offers pizzas, beers, appetizers, entrees, pastas, sandwiches, salads and desserts under the brand names of BJ's Restaurant and Brewery, BJ's Restaurant and Brewhouse, BJ's Pizza & Grill and BJ's Grill. The company is expected to report on Feb 18.

Energy

The energy sector has been on a downslide over the past six months with fundamentals getting even worse in 2015. The relentless slide in oil prices this year primarily came from higher crude stockpiles, increased U.S. production, reduced OPEC demand, and hopes of a European stimulus. Further, a number of brokerage firms have provided a bearish outlook on the oil prices, reducing their price target on the commodity.

However, investors could easily tap this beaten down sector with Diamond Offshore Drilling, Inc. (DO - Analyst Report), which is looking pretty solid from an earnings perspective. The stock has an Earnings ESP of 4.62% and consistently beat earnings estimates over the past four quarters with an average beat of 24.32%.

Further, the stock has seen a positive earnings estimate revision by a penny over the past 30 days to 65 cents for the fourth quarter. The stock has a Zacks Rank #3 and has lost about 14% of its value since the start of the year.
 
Based in Houston, TX, Diamond Offshore is a leader in offshore drilling, providing contract drilling services in ultra-deepwater, deepwater and mid-water; and non-floater or jack-up markets to the energy industry around the globe. The company is slated to release its earnings before the market opens on February 9.