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5 Stocks With Solid Sales Growth to Beat Market Volatility
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With markets being extremely volatile of late, it’s tough to select stocks that will offer steady returns. In such situations, you must use conventional strategies based on key fundamentals to select stocks. One such strategy is to focus on sales growth.
Investors often fail to keep an eye on sales growth while choosing stocks, as a company’s share price is usually sensitive to its earnings momentum. Nonetheless, earnings can be easily manipulated. That’s why sales must always be taken into consideration.
With regard to this, stocks like Whirlpool Corporation (WHR - Free Report) , Huntington Ingalls Industries, Inc. (HII - Free Report) , Silgan Holdings Inc. (SLGN - Free Report) , Starwood Property Trust, Inc. (STWD - Free Report) and J.B. Hunt Transport Services (JBHT - Free Report) are worth betting on.
Sales growth is an important indicator of a company's health and ability to sustain its business. The main advantage is that the sales figure is generally not manipulated and is less volatile than earnings.
Without revenue growth, bottom-line improvement may not be sustainable in the long term. While a company can show earnings strength by reducing expenses, a sustainable bottom-line recovery usually requires sales growth.
Focusing exclusively on sales growth is not enough though. So, taking into consideration a company’s cash position along with its sales number can prove to be a more dependable strategy.
Substantial cash on hand and a 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 good cash position indicates that revenues are being channelized in the right direction.
Selecting the 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 21 stocks that qualified the screening:
Whirlpool is one of the largest manufacturers of home appliances in the world. Benton Harbor, MI-based WHR manufactures products in 14 countries and markets products in nearly every nation around the world.
Whirlpool’s expected sales growth rate for 2022 is 5.6%. The stock currently sports a Zacks Rank #1.
Headquartered in Newport News, VA, Huntington Ingalls designs, builds and maintains nuclear-powered and non-nuclear ships for the U.S. Navy and Coast Guard and provides after-market services for military ships around the globe. HII operates through three segments: Ingalls division, Newport News Shipbuilding division and Technical Solutions division.
Huntington Ingalls’ expected sales growth rate for 2022 is 14.7%. It currently carries a Zacks Rank #2.
Based in Stamford, CT, Silgan Holdings is a leading supplier of rigid packaging for consumer goods products. SLGN is the largest metal-container supplier for food products in North America.
Silgan Holdings’ sales are expected to improve 14.1% for 2022. The stock carries a Zacks Rank #2 at present.
Greenwich, CT-based Starwood Property operates as a real estate investment trust in the United States and Europe. STWD operates through four segments: Commercial and Residential Lending, Infrastructure Lending, Property and Investing and Servicing segments.
Starwood Property’s expected sales growth rate for 2022 is 18.5%. The stock carries a Zacks Rank #2 at present.
J.B. Hunt, based in Lowell, AR, is a provider of a broad range of transportation services to a diverse group of customers in the United States, Canada and Mexico. JBHT operates through five business segments - JBI, Dedicated Contract Services, FMS, JBT and Integrated Capacity Solutions.
J.B. Hunt’s expected sales growth rate for 2022 is 14.1%. The stock sports a Zacks Rank #1 currently.
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.
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5 Stocks With Solid Sales Growth to Beat Market Volatility
With markets being extremely volatile of late, it’s tough to select stocks that will offer steady returns. In such situations, you must use conventional strategies based on key fundamentals to select stocks. One such strategy is to focus on sales growth.
Investors often fail to keep an eye on sales growth while choosing stocks, as a company’s share price is usually sensitive to its earnings momentum. Nonetheless, earnings can be easily manipulated. That’s why sales must always be taken into consideration.
With regard to this, stocks like Whirlpool Corporation (WHR - Free Report) , Huntington Ingalls Industries, Inc. (HII - Free Report) , Silgan Holdings Inc. (SLGN - Free Report) , Starwood Property Trust, Inc. (STWD - Free Report) and J.B. Hunt Transport Services (JBHT - Free Report) are worth betting on.
Sales growth is an important indicator of a company's health and ability to sustain its business. The main advantage is that the sales figure is generally not manipulated and is less volatile than earnings.
Without revenue growth, bottom-line improvement may not be sustainable in the long term. While a company can show earnings strength by reducing expenses, a sustainable bottom-line recovery usually requires sales growth.
Focusing exclusively on sales growth is not enough though. So, taking into consideration a company’s cash position along with its sales number can prove to be a more dependable strategy.
Substantial cash on hand and a 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 good cash position indicates that revenues are being channelized in the right direction.
Selecting the 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 21 stocks that qualified the screening:
Whirlpool is one of the largest manufacturers of home appliances in the world. Benton Harbor, MI-based WHR manufactures products in 14 countries and markets products in nearly every nation around the world.
Whirlpool’s expected sales growth rate for 2022 is 5.6%. The stock currently sports a Zacks Rank #1.
Headquartered in Newport News, VA, Huntington Ingalls designs, builds and maintains nuclear-powered and non-nuclear ships for the U.S. Navy and Coast Guard and provides after-market services for military ships around the globe. HII operates through three segments: Ingalls division, Newport News Shipbuilding division and Technical Solutions division.
Huntington Ingalls’ expected sales growth rate for 2022 is 14.7%. It currently carries a Zacks Rank #2.
Based in Stamford, CT, Silgan Holdings is a leading supplier of rigid packaging for consumer goods products. SLGN is the largest metal-container supplier for food products in North America.
Silgan Holdings’ sales are expected to improve 14.1% for 2022. The stock carries a Zacks Rank #2 at present.
Greenwich, CT-based Starwood Property operates as a real estate investment trust in the United States and Europe. STWD operates through four segments: Commercial and Residential Lending, Infrastructure Lending, Property and Investing and Servicing segments.
Starwood Property’s expected sales growth rate for 2022 is 18.5%. The stock carries a Zacks Rank #2 at present.
J.B. Hunt, based in Lowell, AR, is a provider of a broad range of transportation services to a diverse group of customers in the United States, Canada and Mexico. JBHT operates through five business segments - JBI, Dedicated Contract Services, FMS, JBT and Integrated Capacity Solutions.
J.B. Hunt’s expected sales growth rate for 2022 is 14.1%. The stock sports a Zacks Rank #1 currently.
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