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Find Strong Stocks for the Summer with this 'First Profit' Screen
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Stocks climbed in afternoon trading Tuesday, recovering from early losses in what’s been an up and down session. Wall Street has been a bit more subdued in June, following the S&P 500’s roughly 6% rebound during the final full week of May that ended a seven-week tumble.
The market comeback and the recent sideways movement comes despite mounting recession fears and 40-year high inflation. The near-term outlook for the economy is mixed, with consumers still spending even as their overall sentiment falls to decade-long lows. Meanwhile, retailers such as Target are struggling to adapt to changing, post-pandemic shopping patterns and dealing with major inventory issues.
The latest CPI report is due out Friday and it’s likely to prove pivotal in the near term as investors attempt to gauge the ability of U.S. consumers to keep spending, and more importantly, understand what the Fed will have to do to reel prices into more acceptable levels.
Even with the unknowns, investors are putting their money to work in the stock market in 2022 because there simply aren’t many other options out there to keep pace with rising prices. Even though the market has fallen this year, there are many stocks and areas of the economy doing rather well.
Let’s utilize our Zacks ‘First Profit’ screen to find strong stocks that have recently turned things around in a big way…
First Profit
The idea is to search for companies that recently reported their first quarterly profit. More specifically, the screen searches for firms that just posted their first profit last quarter, after not posting a profit for at least the previous four quarters.
Finding companies that recently reported their first profits help investors find stocks that can prove to be big winners. These companies may vary widely. Some of the firms might be new, and this recent profit is perhaps the only profit in its short history.
Meanwhile, other companies might have held an impressive and long history of quarterly profitability, but for whatever reason haven't seen a profit in a while. Therefore, the return to profit could spark a turning point that management had promised or Wall Street had been clamoring for.
The concept is relatively simple: if the trend has been one of improvement, there is a solid chance the trend will continue. This is true whether a company has been profitable, or is just reaching that key inflection point.
And that’s what we are screening for today…
• EPS for the previous 4 Quarters less than or equal to 0
(This means in each of the previous 4 quarters (except the most recently reported quarter) the company has reported earnings of less than or equal to zero, i.e., no profit.)
• EPS for the recently reported quarter greater than 0
(This time, the company reported earnings greater than zero, meaning they finally showed a profit.)
• Current Price greater than or equal to 5
(Stocks that are trading for less than $5 are more speculative.)
The screen is pretty simple, yet powerful. Here are two of the roughly 20 stocks that made it through this week's screen…
Playa Hotels & Resorts N.V. is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. Playa owns and/or manages a total portfolio consisting of 22 resorts in Mexico, Jamaica, and the Dominican Republic. PLYA shares have surged 120% in the past two years compared to its industry’s 31% climb.
More recently, the stock is up 16% in 2022 to crush its industry’s 3% drop and the S&P 500’s 16% decline. Investors looking for low-priced stocks might gravitate toward its under $10 a share price tag, with Playa Hotels & Resorts currently trading around $9.23 a share. Despite its climb and industry outperformance, PLYA is trading at 23.8X forward 12-month earnings, which marks a discount to its industry’s 26.1X.
Playa Hotels & Resorts stands to benefit from a booming summer travel season and beyond as consumers attempt to do all they can to get back to their pre-pandemic lives. PLYA stock is part of the Hotels and Motels space that lands in the top 21% of over 250 Zacks industries right now. PLYA’s top and bottom-line outlook for both this year and next are strong. And its strong EPS revisions help it land a Zacks Rank #1 (Strong Buy) right now.
CVR Energy is a diversified holding company primarily engaged in the petroleum refining and marketing business through its interest in CVR Refining and the nitrogen fertilizer manufacturing business through its interest in CVR Partners, LP. CVR Energy is benefitting from soaring oil and energy prices and its Oil and Gas - Refining and Marketing is in the top 1% of over 250 Zacks industries.
CVR Energy crushed our first quarter FY22 earnings estimates on May 2, posting adjusted earnings of +$0.02 vs/ the Zacks estimate that called for -$0.10 a share loss. Looking ahead, CVR Energy’s revenue is projected to jump 29% this year to $9.37 billion to help it swing from an adjusted loss of -$0.93 a share last year to +$3.23 a share in 2022. And its impressive post-release EPS revisions help CVR Energy land a Zacks Rank #1 (Strong Buy) right now, alongside its overall “A” VGM grade.
CVR Energy shares have skyrocketed 234% in 2022 alone to blow away its highly-ranked industry’s 45% climb. Despite the huge run, CVI shares are trading below where they were six months ago at 13.7X forward earnings. And its dividend is yielding around 3.7% at the moment.
Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Image: Bigstock
Find Strong Stocks for the Summer with this 'First Profit' Screen
Stocks climbed in afternoon trading Tuesday, recovering from early losses in what’s been an up and down session. Wall Street has been a bit more subdued in June, following the S&P 500’s roughly 6% rebound during the final full week of May that ended a seven-week tumble.
The market comeback and the recent sideways movement comes despite mounting recession fears and 40-year high inflation. The near-term outlook for the economy is mixed, with consumers still spending even as their overall sentiment falls to decade-long lows. Meanwhile, retailers such as Target are struggling to adapt to changing, post-pandemic shopping patterns and dealing with major inventory issues.
The latest CPI report is due out Friday and it’s likely to prove pivotal in the near term as investors attempt to gauge the ability of U.S. consumers to keep spending, and more importantly, understand what the Fed will have to do to reel prices into more acceptable levels.
Even with the unknowns, investors are putting their money to work in the stock market in 2022 because there simply aren’t many other options out there to keep pace with rising prices. Even though the market has fallen this year, there are many stocks and areas of the economy doing rather well.
Let’s utilize our Zacks ‘First Profit’ screen to find strong stocks that have recently turned things around in a big way…
First Profit
The idea is to search for companies that recently reported their first quarterly profit. More specifically, the screen searches for firms that just posted their first profit last quarter, after not posting a profit for at least the previous four quarters.
Finding companies that recently reported their first profits help investors find stocks that can prove to be big winners. These companies may vary widely. Some of the firms might be new, and this recent profit is perhaps the only profit in its short history.
Meanwhile, other companies might have held an impressive and long history of quarterly profitability, but for whatever reason haven't seen a profit in a while. Therefore, the return to profit could spark a turning point that management had promised or Wall Street had been clamoring for.
The concept is relatively simple: if the trend has been one of improvement, there is a solid chance the trend will continue. This is true whether a company has been profitable, or is just reaching that key inflection point.
And that’s what we are screening for today…
• EPS for the previous 4 Quarters less than or equal to 0
(This means in each of the previous 4 quarters (except the most recently reported quarter) the company has reported earnings of less than or equal to zero, i.e., no profit.)
• EPS for the recently reported quarter greater than 0
(This time, the company reported earnings greater than zero, meaning they finally showed a profit.)
• Current Price greater than or equal to 5
(Stocks that are trading for less than $5 are more speculative.)
The screen is pretty simple, yet powerful. Here are two of the roughly 20 stocks that made it through this week's screen…
Playa Hotels & Resorts (PLYA - Free Report)
Playa Hotels & Resorts N.V. is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. Playa owns and/or manages a total portfolio consisting of 22 resorts in Mexico, Jamaica, and the Dominican Republic. PLYA shares have surged 120% in the past two years compared to its industry’s 31% climb.
More recently, the stock is up 16% in 2022 to crush its industry’s 3% drop and the S&P 500’s 16% decline. Investors looking for low-priced stocks might gravitate toward its under $10 a share price tag, with Playa Hotels & Resorts currently trading around $9.23 a share. Despite its climb and industry outperformance, PLYA is trading at 23.8X forward 12-month earnings, which marks a discount to its industry’s 26.1X.
Playa Hotels & Resorts stands to benefit from a booming summer travel season and beyond as consumers attempt to do all they can to get back to their pre-pandemic lives. PLYA stock is part of the Hotels and Motels space that lands in the top 21% of over 250 Zacks industries right now. PLYA’s top and bottom-line outlook for both this year and next are strong. And its strong EPS revisions help it land a Zacks Rank #1 (Strong Buy) right now.
CVR Energy (CVI - Free Report)
CVR Energy is a diversified holding company primarily engaged in the petroleum refining and marketing business through its interest in CVR Refining and the nitrogen fertilizer manufacturing business through its interest in CVR Partners, LP. CVR Energy is benefitting from soaring oil and energy prices and its Oil and Gas - Refining and Marketing is in the top 1% of over 250 Zacks industries.
CVR Energy crushed our first quarter FY22 earnings estimates on May 2, posting adjusted earnings of +$0.02 vs/ the Zacks estimate that called for -$0.10 a share loss. Looking ahead, CVR Energy’s revenue is projected to jump 29% this year to $9.37 billion to help it swing from an adjusted loss of -$0.93 a share last year to +$3.23 a share in 2022. And its impressive post-release EPS revisions help CVR Energy land a Zacks Rank #1 (Strong Buy) right now, alongside its overall “A” VGM grade.
CVR Energy shares have skyrocketed 234% in 2022 alone to blow away its highly-ranked industry’s 45% climb. Despite the huge run, CVI shares are trading below where they were six months ago at 13.7X forward earnings. And its dividend is yielding around 3.7% at the moment.
Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.
Click here to sign up for a free trial to the Research Wizard today.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance/.