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Take a company’s revenues over a given period of time, subtract the cost of production and you will have its earnings! Earnings growth enthralls almost everyone, right from the top brass to research analysts. And why not? If the company doesn’t make money, it won’t last over the long haul.
This metric is also considered to be the most noteworthy variable in influencing the share price. But, expectations of earnings also play a significant role in influencing the price of a stock.
Earnings Estimates Shape Share Prices
We have often seen a decline in the stock price despite earnings growth and a rally in the price following an earnings decline. This is largely a result of a company’s earnings failing to meet market expectations.
So, what does earnings estimates symbolize? Earnings estimates embody analysts’ opinions of factors such as sales growth, product demand, competitive industry environment, profit margins and cost controls. Analysts can also examine the cash flow based on these periodic earnings estimates to determine the fair value of a company.
Investors, thus, should be on the lookout for stocks that are ready to make a big move. Hence, it is important for investors to buy stocks that have historical earnings growth and are also seeing a rise in quarterly and annual earnings estimates.
Screening Parameters:
In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we added the following parameters:
Zacks Rank less than or equal to 2 (Only Zacks' 'Buys' and 'Strong Buys' are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.)
5-Year Historical EPS Growth (%) greater than X-Industry. (Stocks that possess strong EPS growth history.)
% Change EPS F(0)/F(-1) greater than or equal to 5 (Companies that witnessed year-over-year earnings growth rate of 5% or more in the last reported fiscal.)
% Change Q1 Estimates over the last 4 weeks greater than zero(Stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks.)
% Change F1 Estimates over the last 1 week greater than zero (Stocks that have seen their annual earnings estimates revised higher in the last 1 week.)
% Change F1 Estimates over the last 4 weeks greater than zero (Stocks that have seen their annual earnings estimates revised higher in the last 4 weeks.)
The above criteria narrowed down the universe of around 7,854 stocks to only seven. Here are the top five stocks:
Calavo Growers, Inc. (CVGW - Free Report) operates in the avocado industry. The company provides value-added fresh food. Calavo Growers has a Zacks Rank #1 (Strong Buy). The company’s estimated growth rate for this year is 16.1%, more than the Agriculture - Operations industry’s expected gain of 7.4%.
Five Below Inc (FIVE - Free Report) is a specialty retailer offering a range of merchandise for teen and pre-teen customer. The company has a Zacks Rank #2 (Buy). The company’s estimated growth rate for this year is 25.6%, higher than the Retail - Miscellaneous industry’s expected gain of 14.3%.
KB Home (KBH - Free Report) is engaged in selling and building a range of new homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family residential homes. The company has a Zacks Rank #1. The company’s estimated growth rate for this year is 46%, more than the Building Products - Home Builders industry’s expected gain of 14.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
SYNNEX Corporation (SNX - Free Report) is a business process services company. The company provides a range of distribution, logistics and integration services for the technology industry and providing outsourced services focused on customer engagement strategy. SYNNEX has a Zacks Rank #1. The company’s estimated growth rate for this year is 19.8%, better than the Business - Software Services industry’s expected gain of 12.9%.
Cypress Semiconductor Corporation manufactures embedded system solutions for automotive, industrial, home automation and appliances, consumer electronics and medical products. The company has a Zacks Rank #2. The company’s estimated growth rate for this year is 150%, in contrast to the Semiconductor - Communications industry’s expected decline of 4%.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
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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Top 5 Earnings Growth Stocks to Buy Right Away
Take a company’s revenues over a given period of time, subtract the cost of production and you will have its earnings! Earnings growth enthralls almost everyone, right from the top brass to research analysts. And why not? If the company doesn’t make money, it won’t last over the long haul.
This metric is also considered to be the most noteworthy variable in influencing the share price. But, expectations of earnings also play a significant role in influencing the price of a stock.
Earnings Estimates Shape Share Prices
We have often seen a decline in the stock price despite earnings growth and a rally in the price following an earnings decline. This is largely a result of a company’s earnings failing to meet market expectations.
So, what does earnings estimates symbolize? Earnings estimates embody analysts’ opinions of factors such as sales growth, product demand, competitive industry environment, profit margins and cost controls. Analysts can also examine the cash flow based on these periodic earnings estimates to determine the fair value of a company.
Investors, thus, should be on the lookout for stocks that are ready to make a big move. Hence, it is important for investors to buy stocks that have historical earnings growth and are also seeing a rise in quarterly and annual earnings estimates.
Screening Parameters:
In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we added the following parameters:
Zacks Rank less than or equal to 2 (Only Zacks' 'Buys' and 'Strong Buys' are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.)
5-Year Historical EPS Growth (%) greater than X-Industry. (Stocks that possess strong EPS growth history.)
% Change EPS F(0)/F(-1) greater than or equal to 5 (Companies that witnessed year-over-year earnings growth rate of 5% or more in the last reported fiscal.)
% Change Q1 Estimates over the last 4 weeks greater than zero(Stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks.)
% Change F1 Estimates over the last 1 week greater than zero (Stocks that have seen their annual earnings estimates revised higher in the last 1 week.)
% Change F1 Estimates over the last 4 weeks greater than zero (Stocks that have seen their annual earnings estimates revised higher in the last 4 weeks.)
The above criteria narrowed down the universe of around 7,854 stocks to only seven. Here are the top five stocks:
Calavo Growers, Inc. (CVGW - Free Report) operates in the avocado industry. The company provides value-added fresh food. Calavo Growers has a Zacks Rank #1 (Strong Buy). The company’s estimated growth rate for this year is 16.1%, more than the Agriculture - Operations industry’s expected gain of 7.4%.
Five Below Inc (FIVE - Free Report) is a specialty retailer offering a range of merchandise for teen and pre-teen customer. The company has a Zacks Rank #2 (Buy). The company’s estimated growth rate for this year is 25.6%, higher than the Retail - Miscellaneous industry’s expected gain of 14.3%.
KB Home (KBH - Free Report) is engaged in selling and building a range of new homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family residential homes. The company has a Zacks Rank #1. The company’s estimated growth rate for this year is 46%, more than the Building Products - Home Builders industry’s expected gain of 14.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
SYNNEX Corporation (SNX - Free Report) is a business process services company. The company provides a range of distribution, logistics and integration services for the technology industry and providing outsourced services focused on customer engagement strategy. SYNNEX has a Zacks Rank #1. The company’s estimated growth rate for this year is 19.8%, better than the Business - Software Services industry’s expected gain of 12.9%.
Cypress Semiconductor Corporation manufactures embedded system solutions for automotive, industrial, home automation and appliances, consumer electronics and medical products. The company has a Zacks Rank #2. The company’s estimated growth rate for this year is 150%, in contrast to the Semiconductor - Communications industry’s expected decline of 4%.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
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 »