5 Best Stocks With Attractive Earnings Growth to Invest In
Irrespective of whether it is a start-up or a well-known company, earnings growth is the main priority for any organization. This is because if the company doesn’t make money, it won’t last in the long run.
So, what’s earnings growth? Study a company’s revenues over a given period, subtract the production cost, and you have earnings. By the way, this is also considered the most important variable influencing the share price. But, expectations of earnings play a noteworthy role.
Earnings Estimates & Share Price Movements
Frequently, we have seen a decline in the stock price despite earnings growth and a rally in price following an earnings decline. This is largely the result of a company’s earnings failing to meet market expectations.
Earnings estimates embody analysts’ opinions on factors such as sales growth, product demand, competitive industry environment, profit margins, and cost control. Thus, earnings estimates serve as a valuable tool, while making investment decisions.
Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.
Thus, investors should be on the lookout for stocks ready to make a big move. Hence, investors need to buy stocks with historical earnings growth and are seeing a rise in quarterly and annual earnings estimates.
To shortlist stocks that have striking earnings growth and positive estimate revisions, we have added the following parameters:
Zacks Rank less than or equal to 2 (Only Zacks’ ‘Buys’ and ‘Strong Buys’ are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.)
5-Year Historical EPS Growth (%) greater than X-Industry (stocks with a strong EPS growth history).
% Change EPS F(0)/F(-1) greater than or equal to 5 (companies that saw year-over-year earnings growth of 5% or more in the last reported fiscal).
% Change Q1 Estimates over the last 4 weeks greater than zero (stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks).
% Change F1 Estimates over the last 1 week greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 1 week).
% Change F1 Estimates over the last 4 weeks greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 4 weeks).
The above criteria narrowed down the universe of around 7,839 stocks to only 29. Here are the top five stocks that stand out:
lululemon athletica LULU is a yoga-inspired athletic apparel company that creates lifestyle components. The company has a Zacks Rank #2 (Buy). LULU’s expected earnings growth rate for the current year is 18.4%.
Coca Cola Femsa KOF produces, markets and distributes soft drinks throughout the metropolitan area of Mexico City. The company has a Zacks Rank #1. KOF’s expected earnings growth rate for the current year is 19.1%.
Hilton Worldwide HLT is a hospitality company that owns, leases, manages, develops, and franchises hotels and resorts. The company has a Zacks Rank #2. HLT’s expected earnings growth rate for the current year is 19.6%.
Super Micro Computer SMCI designs, develops, manufactures, and sells energy-efficient, application-optimized server solutions based on the x86 architecture. The company has a Zacks Rank #1. SMCI’s expected earnings growth rate for the current year is 98.8%.
ServiceNow NOW provides cloud computing services that automate digital workflows to accelerate enterprise IT operations. The company has a Zacks Rank #1. NOW’s expected earnings growth rate for the current year is 26.4%.
You can sign up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It’s easy to use. Everything is in plain language. And it’s very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
lululemon athletica inc. (LULU): Free Stock Analysis Report
Coca Cola Femsa S.A.B. de C.V. (KOF): Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI): Free Stock Analysis Report
ServiceNow, Inc. (NOW): Free Stock Analysis Report
Hilton Worldwide Holdings Inc. (HLT): Free Stock Analysis Report
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