We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Top-Ranked Stocks With Solid Sales Growth Worth Betting on
Read MoreHide Full Article
Sales growth is an important metric for any company, as it is an important part of growth projections and influential in strategic decision making. By observing this key metric over a period of time, one can clearly understand a company’s growth trend.
Sales growth is crucial to justify the expenses incurred to run a business. Low revenues result in an unprofitable business and unimpressive financial results. Stagnant companies may generate near-term profits but they need to deliver accelerated growth to attract new investors.
Further, in an improving economy, lack of sales growth most likely indicates that the company is not gaining market share over competitors. In other words, some sustained sales growth is required to support profitability.
Focusing exclusively on sales growth is not enough though. A healthy sales growth rate is certainly a positive indicator for picking good stocks, but it does not ensure profits. So, taking into account a company’s cash position and sales number can prove to be a more dependable strategy.
Strong liquidity position and steady cash flow give a company more flexibility with respect to business decisions and potential investments. Cash also enables a company to endure market downturns. Most importantly, a sufficient cash position indicates that revenues are being channelized in the right direction.
Selecting Winning Stocks
In order to shortlist stocks with impressive sales growth and a high cash balance, we have selected 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow more than $500 million as our main screening parameters.
But sales growth and cash strength are not the absolute criteria for selecting stocks. Hence, we have added certain other factors to arrive at a winning strategy.
P/S Ratio less than X-Industry: This metric determines the value placed on each dollar of a company’s revenues. The lower the ratio, the better it is for picking a stock since the investor is paying less for each unit of sales.
% Change F1 Sales Estimate Revisions (four weeks) greater than X-Industry: Estimate revisions, better than the industry, are often seen to trigger an increase in stock price.
Operating Margin (average last five years) greater than 5%: Operating margin measures how much every dollar of a company's sales translates into profits. A high ratio indicates that the company has good cost control and sales are increasing faster than costs — an optimal situation.
Return on Equity (ROE) greater than 5%: This metric will ensure that sales growth is translated into profits and the company is not hoarding cash. A high ROE means that the company is spending wisely and is in all likelihood profitable.
Here are five of the 16 stocks that qualified the screening:
Headquartered in San Francisco, CA, Williams-Sonoma, Inc. (WSM - Free Report) is a multi-channel specialty retailer of premium quality home products. Its expected sales growth rate for fiscal 2022 is 5.5%. The stock currently sports a Zacks Rank #1.
Southern Copper Corporation (SCCO - Free Report) — based in Phoenix, AZ — is engaged in mining, exploring, smelting, and refining copper as well as other minerals. The company’s expected sales growth rate for 2021 is 11.9%. It currently sports a Zacks Rank #1.
Headquartered in Greensboro, NC, Qorvo Inc. (QRVO - Free Report) is a leading provider of core technologies and radio frequency solutions for mobile, infrastructure, as well as aerospace/defense applications. Its expected sales growth rate for fiscal 2022 is 11.4%. The stock carries a Zacks Rank #2 at present.
Based in Westlake Village, CA, PennyMac Financial Services, Inc. (PFSI - Free Report) is engaged in mortgage banking and investment management activities. Its expected sales growth rate for 2021 is 2.3%. The stock sports a Zacks Rank #1 at present.
Birmingham, AL-based Medical Properties Trust, Inc. (MPW - Free Report) is a self-advised real estate investment trust that acquires and develops net-leased hospital facilities. Its expected sales growth rate for 2021 is 15.1%. The stock currently carries a Zacks Rank #2.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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.
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
5 Top-Ranked Stocks With Solid Sales Growth Worth Betting on
Sales growth is an important metric for any company, as it is an important part of growth projections and influential in strategic decision making. By observing this key metric over a period of time, one can clearly understand a company’s growth trend.
Sales growth is crucial to justify the expenses incurred to run a business. Low revenues result in an unprofitable business and unimpressive financial results. Stagnant companies may generate near-term profits but they need to deliver accelerated growth to attract new investors.
Further, in an improving economy, lack of sales growth most likely indicates that the company is not gaining market share over competitors. In other words, some sustained sales growth is required to support profitability.
Focusing exclusively on sales growth is not enough though. A healthy sales growth rate is certainly a positive indicator for picking good stocks, but it does not ensure profits. So, taking into account a company’s cash position and sales number can prove to be a more dependable strategy.
Strong liquidity position and steady cash flow give a company more flexibility with respect to business decisions and potential investments. Cash also enables a company to endure market downturns. Most importantly, a sufficient cash position indicates that revenues are being channelized in the right direction.
Selecting Winning Stocks
In order to shortlist stocks with impressive sales growth and a high cash balance, we have selected 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow more than $500 million as our main screening parameters.
But sales growth and cash strength are not the absolute criteria for selecting stocks. Hence, we have added certain other factors to arrive at a winning strategy.
P/S Ratio less than X-Industry: This metric determines the value placed on each dollar of a company’s revenues. The lower the ratio, the better it is for picking a stock since the investor is paying less for each unit of sales.
% Change F1 Sales Estimate Revisions (four weeks) greater than X-Industry: Estimate revisions, better than the industry, are often seen to trigger an increase in stock price.
Operating Margin (average last five years) greater than 5%: Operating margin measures how much every dollar of a company's sales translates into profits. A high ratio indicates that the company has good cost control and sales are increasing faster than costs — an optimal situation.
Return on Equity (ROE) greater than 5%: This metric will ensure that sales growth is translated into profits and the company is not hoarding cash. A high ROE means that the company is spending wisely and is in all likelihood profitable.
Zacks Rank less than or equal to 2: Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform, irrespective of the market environment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are five of the 16 stocks that qualified the screening:
Headquartered in San Francisco, CA, Williams-Sonoma, Inc. (WSM - Free Report) is a multi-channel specialty retailer of premium quality home products. Its expected sales growth rate for fiscal 2022 is 5.5%. The stock currently sports a Zacks Rank #1.
Southern Copper Corporation (SCCO - Free Report) — based in Phoenix, AZ — is engaged in mining, exploring, smelting, and refining copper as well as other minerals. The company’s expected sales growth rate for 2021 is 11.9%. It currently sports a Zacks Rank #1.
Headquartered in Greensboro, NC, Qorvo Inc. (QRVO - Free Report) is a leading provider of core technologies and radio frequency solutions for mobile, infrastructure, as well as aerospace/defense applications. Its expected sales growth rate for fiscal 2022 is 11.4%. The stock carries a Zacks Rank #2 at present.
Based in Westlake Village, CA, PennyMac Financial Services, Inc. (PFSI - Free Report) is engaged in mortgage banking and investment management activities. Its expected sales growth rate for 2021 is 2.3%. The stock sports a Zacks Rank #1 at present.
Birmingham, AL-based Medical Properties Trust, Inc. (MPW - Free Report) is a self-advised real estate investment trust that acquires and develops net-leased hospital facilities. Its expected sales growth rate for 2021 is 15.1%. The stock currently carries a Zacks Rank #2.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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.
Click here to sign up for a free trial to the Research Wizard today.
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