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5 Stocks with Impressive Sales Growth Worth Buying Right Now
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Sales growth is an important metric for any company, as it is an important part of growth projections and instrumental 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 fixed and variable expenses incurred to operate a business. Low revenues lead to an unprofitable business and unimpressive financial results. Stagnant companies may generate near-term profit. But companies need to show accelerated growth to attract new investors.
Also, in an improving economy, lack of sales growth most likely indicates that the company is not gaining market share over its competitors. In simple terms, 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. Hence, taking into consideration a company’s cash position along with its 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.
Picking the Winners
In order to shortlist stocks that have witnessed impressive sales growth along with a high cash balance, we have selected 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow greater than $500 million as our main screening parameters.
But sales growth and cash strength are not the absolute criteria for selecting stocks. So, we added certain other factors to arrive at a winning strategy.
Price-to-Sales (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 (4 Weeks) greater than X-Industry: Better-than-industry estimate revision has often been seen to trigger an increase in the stock price.
Operating Margin (Average Last 5 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 for the company.
Return on Equity (ROE) greater than 5%: This metric will ensure that sales growth is being translated into profits and the company is not hoarding cash. A high ROE means 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.
Here are five of the 19 stocks that qualified the screening:
Teradyne, Inc. (TER - Free Report) , based in North Reading, MA, designs, develops, manufactures, sells, and supports automatic test equipment. It has long-term expected earnings per share (EPS) growth rate of 10%. The company sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Rockwell Automation Inc. (ROK - Free Report) provides industrial automation and information solutions. This Milwaukee, WI-based company currently has long-term expected EPS growth rate of 10.6% and carries a Zacks Rank #1.
Headquartered in St. Petersburg, FL, Raymond James Financial, Inc. (RJF - Free Report) is engaged in the underwriting, distribution, trading, and brokerage of equity and debt securities, and the sale of mutual funds and other investment products. The company currently has a long-term expected EPS growth rate of 17% and a Zacks Rank #1.
Western Digital Corporation (WDC - Free Report) , based in Irvine, CA, develops, manufactures, and sells data storage devices and solutions. The company has a long-term expected EPS growth rate of 4.8% and sports a Zacks Rank #1.
Microchip Technology Incorporated (MCHP - Free Report) develops, manufactures, and sells semiconductor products for various embedded control applications. This Chandler, AZ-based company has a long-term expected EPS growth rate of 14.5% and 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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
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5 Stocks with Impressive Sales Growth Worth Buying Right Now
Sales growth is an important metric for any company, as it is an important part of growth projections and instrumental 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 fixed and variable expenses incurred to operate a business. Low revenues lead to an unprofitable business and unimpressive financial results. Stagnant companies may generate near-term profit. But companies need to show accelerated growth to attract new investors.
Also, in an improving economy, lack of sales growth most likely indicates that the company is not gaining market share over its competitors. In simple terms, 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. Hence, taking into consideration a company’s cash position along with its 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.
Picking the Winners
In order to shortlist stocks that have witnessed impressive sales growth along with a high cash balance, we have selected 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow greater than $500 million as our main screening parameters.
But sales growth and cash strength are not the absolute criteria for selecting stocks. So, we added certain other factors to arrive at a winning strategy.
Price-to-Sales (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 (4 Weeks) greater than X-Industry: Better-than-industry estimate revision has often been seen to trigger an increase in the stock price.
Operating Margin (Average Last 5 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 for the company.
Return on Equity (ROE) greater than 5%: This metric will ensure that sales growth is being translated into profits and the company is not hoarding cash. A high ROE means 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.
Here are five of the 19 stocks that qualified the screening:
Teradyne, Inc. (TER - Free Report) , based in North Reading, MA, designs, develops, manufactures, sells, and supports automatic test equipment. It has long-term expected earnings per share (EPS) growth rate of 10%. The company sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Rockwell Automation Inc. (ROK - Free Report) provides industrial automation and information solutions. This Milwaukee, WI-based company currently has long-term expected EPS growth rate of 10.6% and carries a Zacks Rank #1.
Headquartered in St. Petersburg, FL, Raymond James Financial, Inc. (RJF - Free Report) is engaged in the underwriting, distribution, trading, and brokerage of equity and debt securities, and the sale of mutual funds and other investment products. The company currently has a long-term expected EPS growth rate of 17% and a Zacks Rank #1.
Western Digital Corporation (WDC - Free Report) , based in Irvine, CA, develops, manufactures, and sells data storage devices and solutions. The company has a long-term expected EPS growth rate of 4.8% and sports a Zacks Rank #1.
Microchip Technology Incorporated (MCHP - Free Report) develops, manufactures, and sells semiconductor products for various embedded control applications. This Chandler, AZ-based company has a long-term expected EPS growth rate of 14.5% and 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
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »