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These 3 Tech Stocks have Growth Potential that may Surprise You
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Finding companies with the criteria you want isn’t always easy. You could spend hours searching ticker after ticker, only to find companies which aren’t worthy of your hard earned cash. An easier way to navigate through this is by using high quality stock screeners. Screening helps investors narrow down companies to invest in based on their ability to meet every criteria selected. Any company who misses even one of the criteria requirements will be filtered out.
This lets one easily choose ideal metrics. Screens are effective because they sift out bad stocks and only keep the cream of the crop in. It isn’t always easy to create an effective screen. Our Zacks Premium Screens have helped with this, bringing profits to many investors over time. Our predefined criteria are chosen carefully to capture special kinds of companies.
Today, we’ve dug up three cheap growth stocks using one of our premium screens known as “EPS Growth, Revisions, & Positive Surprises”. Some of the metrics of this screen requires a stock to have an average trading volume of at least 100,000 shares over the last 20 days, a positive EPS surprise last quarter, and positive EPS growth last year. In addition to using the metrics on this great screen, I’ve added an additional metric which I feel is appropriate for finding cheaper stocks.
I screened for stocks with a PEG under one. This will allow us to find companies that may be undervalued relative to their expected earnings growth over the next three to five years. Let’s see what our modified premium screen has found for us today.
Silicon Motion focuses on making and marketing universally compatible and low-power semiconductor solutions for the multimedia consumer electronics market. They develop NAND flash controller ICs for solid-state storage drives and also make specialty RF ICs for mobile devices. SIMO has earned a “B” for growth, and it also has a PEG of 0.92. A PEG under 1 may suggest that there is value present.
Silicon has traits which are desirable for any growth candidate. For starters, the corporation has consistently posted high gross margin levels. Over the last few years, gross margin has been in a range close to 50%. The company’s net margin of 18.29% is impressive, and net income grew by over 36% last year. Sales grew by about 25% last year, and 2016 is forecasted to see even more growth, with revenues projected to increase by 45.61%.
Analysts have unanimously raised their estimates upwards for the current quarter, current year, and next year over the last two months. Two analysts revised estimates in the last 60 days, and this has brought the current quarter EPS consensus up from $0.60 to $0.74. Our current year consensus estimate has also seen notable improvements over the last two months, going from $2.31 to $2.77. SIMO has beaten our EPS consensus estimate in three of the last four quarters, and it has a strong chance of topping our estimate when it releases its next quarterly earnings in late October.
Stamps.com is a company which provides online services for mailing or shipping letters, packages, or parcels anywhere in the US at any time. Their platform makes it easy for customers to select a carrier, print postage or shipping labels, schedule a pick-up, and track packages. STMP is a Zacks Rank #1 (Strong Buy) and it has a market cap of $1.61 billion.
With a current ratio of 2.28, it is clear to see that Stamps has a good amount of liquidity. The company’s earnings are projected to grow by 61.24% this year, and STMP outpaces the industry’s expected earnings growth of 10.81% by a wide margin. Stamps looks to grow its top line significantly, with sales forecasted to increase by 55.97% this year. This is great because Stamps didn’t see the same level of revenues growth last year (45.5%).
Stamps trades at a forward PE and PEG of 17.06 and 0.85 respectively. It trades at a reasonable earnings multiple, and it is not too leveraged by any means, as it has a debt-to-equity ratio of 0.45. Stamps.com has beaten our EPS consensus estimate in each of the last four quarters. Just last quarter, it topped earnings expectations by a whopping 62.64%. Hopefully the company beats expectations once again when it reports its quarterly earnings in early November.
NetEase develops applications, services, and other technologies for the Internet in China. It offers online gaming services that are developed in-house. It also provides online advertising, community services, entertainment content, and e-mail services. NetEase is a Zacks Rank #1 (Strong Buy) and it has a market cap of $30.67 billion.
NetEase’s valuation doesn’t seem to be too steep since it has a forward PE of 19.36 and a PEG of 0.67. In the last three months, NTES stock has gained 42.8% and over that span of time, our fiscal year EPS consensus estimate has improved, going from $10.50 to $11.95. Over the last three years, NetEase has seen its gross profit nearly double. In fiscal 2016, sales are expected to increase by 55.61%. EPS is forecasted to see a large jump this year as well, with expectations coming in at growth of 52.47%.
In the last two months, 2 analysts have revised their quarterly EPS estimates higher, and our consensus estimate for this quarter has improved, going from $2.59 to $3.09. In the same span of time, no analysts have revised their expectations lower. NetEase has a good track record for topping our consensus, and it has beaten our estimates in each of the last four quarters. NTES is expected to release its next quarterly earnings report in early to mid November.
One magical screening ingredient which can’t be overlooked is a Zacks Rank #2 (Buy) or better. The rank helps to find companies which look like dependable earnings candidates. In addition to this great metric, the Zacks Premium Screenshelp you to add other criteria to find the most superior investment choices. While this article outlined potential candidates from one screen, the Zacks Premium service gives you access to the “EPS Growth, Revisions, & Positive Surprises” and 45 other premium screens designed to give you superior investment returns.
To use Zacks Premium Screens to find more stock picks based on criteria that’s most important to you— plus, gain access to the Zacks Rank for your stocks, mutual funds and ETFs; Zacks Style Scores, Equity Research Reports; Focus List portfolio of 50-longer-term stocks and more—start your 30-day free trial to Zacks Premium.
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These 3 Tech Stocks have Growth Potential that may Surprise You
Finding companies with the criteria you want isn’t always easy. You could spend hours searching ticker after ticker, only to find companies which aren’t worthy of your hard earned cash. An easier way to navigate through this is by using high quality stock screeners. Screening helps investors narrow down companies to invest in based on their ability to meet every criteria selected. Any company who misses even one of the criteria requirements will be filtered out.
This lets one easily choose ideal metrics. Screens are effective because they sift out bad stocks and only keep the cream of the crop in. It isn’t always easy to create an effective screen. Our Zacks Premium Screens have helped with this, bringing profits to many investors over time. Our predefined criteria are chosen carefully to capture special kinds of companies.
Today, we’ve dug up three cheap growth stocks using one of our premium screens known as “EPS Growth, Revisions, & Positive Surprises”. Some of the metrics of this screen requires a stock to have an average trading volume of at least 100,000 shares over the last 20 days, a positive EPS surprise last quarter, and positive EPS growth last year. In addition to using the metrics on this great screen, I’ve added an additional metric which I feel is appropriate for finding cheaper stocks.
I screened for stocks with a PEG under one. This will allow us to find companies that may be undervalued relative to their expected earnings growth over the next three to five years. Let’s see what our modified premium screen has found for us today.
Silicon Motion-(SIMO - Free Report)
Silicon Motion focuses on making and marketing universally compatible and low-power semiconductor solutions for the multimedia consumer electronics market. They develop NAND flash controller ICs for solid-state storage drives and also make specialty RF ICs for mobile devices. SIMO has earned a “B” for growth, and it also has a PEG of 0.92. A PEG under 1 may suggest that there is value present.
Silicon has traits which are desirable for any growth candidate. For starters, the corporation has consistently posted high gross margin levels. Over the last few years, gross margin has been in a range close to 50%. The company’s net margin of 18.29% is impressive, and net income grew by over 36% last year. Sales grew by about 25% last year, and 2016 is forecasted to see even more growth, with revenues projected to increase by 45.61%.
Analysts have unanimously raised their estimates upwards for the current quarter, current year, and next year over the last two months. Two analysts revised estimates in the last 60 days, and this has brought the current quarter EPS consensus up from $0.60 to $0.74. Our current year consensus estimate has also seen notable improvements over the last two months, going from $2.31 to $2.77. SIMO has beaten our EPS consensus estimate in three of the last four quarters, and it has a strong chance of topping our estimate when it releases its next quarterly earnings in late October.
Revenue (TTM)
Revenue (TTM) | Quote
Stamps.com-
Stamps.com is a company which provides online services for mailing or shipping letters, packages, or parcels anywhere in the US at any time. Their platform makes it easy for customers to select a carrier, print postage or shipping labels, schedule a pick-up, and track packages. STMP is a Zacks Rank #1 (Strong Buy) and it has a market cap of $1.61 billion.
With a current ratio of 2.28, it is clear to see that Stamps has a good amount of liquidity. The company’s earnings are projected to grow by 61.24% this year, and STMP outpaces the industry’s expected earnings growth of 10.81% by a wide margin. Stamps looks to grow its top line significantly, with sales forecasted to increase by 55.97% this year. This is great because Stamps didn’t see the same level of revenues growth last year (45.5%).
Stamps trades at a forward PE and PEG of 17.06 and 0.85 respectively. It trades at a reasonable earnings multiple, and it is not too leveraged by any means, as it has a debt-to-equity ratio of 0.45. Stamps.com has beaten our EPS consensus estimate in each of the last four quarters. Just last quarter, it topped earnings expectations by a whopping 62.64%. Hopefully the company beats expectations once again when it reports its quarterly earnings in early November.
Revenue (TTM)
Revenue (TTM) | Quote
NetEase Inc-(NTES - Free Report)
NetEase develops applications, services, and other technologies for the Internet in China. It offers online gaming services that are developed in-house. It also provides online advertising, community services, entertainment content, and e-mail services. NetEase is a Zacks Rank #1 (Strong Buy) and it has a market cap of $30.67 billion.
NetEase’s valuation doesn’t seem to be too steep since it has a forward PE of 19.36 and a PEG of 0.67. In the last three months, NTES stock has gained 42.8% and over that span of time, our fiscal year EPS consensus estimate has improved, going from $10.50 to $11.95. Over the last three years, NetEase has seen its gross profit nearly double. In fiscal 2016, sales are expected to increase by 55.61%. EPS is forecasted to see a large jump this year as well, with expectations coming in at growth of 52.47%.
In the last two months, 2 analysts have revised their quarterly EPS estimates higher, and our consensus estimate for this quarter has improved, going from $2.59 to $3.09. In the same span of time, no analysts have revised their expectations lower. NetEase has a good track record for topping our consensus, and it has beaten our estimates in each of the last four quarters. NTES is expected to release its next quarterly earnings report in early to mid November.
Revenue (Quarterly)
Revenue (Quarterly) | Quote
Bottom Line
One magical screening ingredient which can’t be overlooked is a Zacks Rank #2 (Buy) or better. The rank helps to find companies which look like dependable earnings candidates. In addition to this great metric, the Zacks Premium Screenshelp you to add other criteria to find the most superior investment choices. While this article outlined potential candidates from one screen, the Zacks Premium service gives you access to the “EPS Growth, Revisions, & Positive Surprises” and 45 other premium screens designed to give you superior investment returns.
To use Zacks Premium Screens to find more stock picks based on criteria that’s most important to you— plus, gain access to the Zacks Rank for your stocks, mutual funds and ETFs; Zacks Style Scores, Equity Research Reports; Focus List portfolio of 50-longer-term stocks and more—start your 30-day free trial to Zacks Premium.