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5 Top Stocks With Attractive Sales Growth to Invest In Now
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In the current market scenario with changing customer preferences and habits, evolving needs, demographic changes and an extremely competitive environment, maintaining steady sales growth is the key to survival for any business. Companies are always looking for ways to boost their marketing initiatives to drive sales.
Revenues are often more closely monitored than earnings at the time of assessing the growth of a business. It’s worth keeping in mind that in cases when companies incur a loss, albeit transitorily, they are valued on their revenues, as top-line growth (or decline) is usually an indicator of a company’s future performance.
Therefore, the Price-to-Sales (P/S) ratio can turn out to be a suitable metric for stock valuation. It remains a key stock selection criteria keeping in mind that management usually has limited opportunities to tamper with revenues as they can with earnings. Thus, the P/S ratio is subject to lesser manipulation than the Price-to-Earnings ratio.
Sales growth in isolation is, however, not enough. Consideration of a company’s cash position along with its sales number can be a more dependable strategy. Substantial cash in hand and a steady cash flow give a company more flexibility with respect to business decisions and investments.
Choosing the Winning Stocks
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 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.
Here are five of the 16 stocks that qualified the screening:
Based in Bethesda, MD, Marriott International, Inc. (MAR - Free Report) operates, franchises, and licenses hotels and timeshare properties. The company has expected sales growth rate of 32.9% for the current year and carries a Zacks Rank #2.
Jones Lang LaSalle Incorporated (JLL - Free Report) provides commercial real estate and investment management services. This Chicago, IL -based stock has expected sales growth rate of 13.1% for this year and sports a Zacks Rank #1.
Xylem Inc. (XYL - Free Report) , based in Rye Brook, NY, is engaged in the design, manufacture and service of engineered solutions for water and wastewater applications. Its current year expected sales growth rate is 24.7% and has a Zacks Rank #2.
Total System Services, Inc. provides payment processing, merchant, and related payment services. This Columbus, GA-based company’s current year sales are expected to grow at the rate of 32.5% and the stock has a Zacks Rank #2.
Headquartered in Detroit, MI, DTE Energy Company (DTE - Free Report) is engaged in utility operations. The company has expected sales growth rate of 5.4% for this year and 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 Top Stocks With Attractive Sales Growth to Invest In Now
In the current market scenario with changing customer preferences and habits, evolving needs, demographic changes and an extremely competitive environment, maintaining steady sales growth is the key to survival for any business. Companies are always looking for ways to boost their marketing initiatives to drive sales.
Revenues are often more closely monitored than earnings at the time of assessing the growth of a business. It’s worth keeping in mind that in cases when companies incur a loss, albeit transitorily, they are valued on their revenues, as top-line growth (or decline) is usually an indicator of a company’s future performance.
Therefore, the Price-to-Sales (P/S) ratio can turn out to be a suitable metric for stock valuation. It remains a key stock selection criteria keeping in mind that management usually has limited opportunities to tamper with revenues as they can with earnings. Thus, the P/S ratio is subject to lesser manipulation than the Price-to-Earnings ratio.
Sales growth in isolation is, however, not enough. Consideration of a company’s cash position along with its sales number can be a more dependable strategy. Substantial cash in hand and a steady cash flow give a company more flexibility with respect to business decisions and investments.
Choosing the Winning Stocks
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 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. 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:
Based in Bethesda, MD, Marriott International, Inc. (MAR - Free Report) operates, franchises, and licenses hotels and timeshare properties. The company has expected sales growth rate of 32.9% for the current year and carries a Zacks Rank #2.
Jones Lang LaSalle Incorporated (JLL - Free Report) provides commercial real estate and investment management services. This Chicago, IL -based stock has expected sales growth rate of 13.1% for this year and sports a Zacks Rank #1.
Xylem Inc. (XYL - Free Report) , based in Rye Brook, NY, is engaged in the design, manufacture and service of engineered solutions for water and wastewater applications. Its current year expected sales growth rate is 24.7% and has a Zacks Rank #2.
Total System Services, Inc. provides payment processing, merchant, and related payment services. This Columbus, GA-based company’s current year sales are expected to grow at the rate of 32.5% and the stock has a Zacks Rank #2.
Headquartered in Detroit, MI, DTE Energy Company (DTE - Free Report) is engaged in utility operations. The company has expected sales growth rate of 5.4% for this year and 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 »