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5 Stocks Worth Investing in Now on Impressive Sales Growth
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Sales growth is an important metric for any company as it is a vital part of growth projections and is instrumental in strategic decision-making. By monitoring this key metric over multiple time periods, one can clearly understand a company’s growth trend.
Sales growth is essential to justify the fixed and variable expenses incurred to operate a business. Low revenues often lead to an unprofitable business and negative financial results. Stagnant companies may generate near-term profit, but can’t rev up enough growth to attract new investors.
Also, in a growing economy, lack of rise in sales most likely denotes that the company is not gaining market share over its competitors. In simple terms, some sustained sales growth is necessary to support the bottom line.
Focusing solely 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. Therefore, 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 sufficient cash position indicates that revenues are being channelized in the right direction.
Picking 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 more 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 (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 for it.
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 18 stocks that qualified the screening:
Based in Dallas, TX, AT&T Inc. (T - Free Report) provides communications and digital entertainment services. Expected sales growth rate for the current year is 8% and the stock carries a Zacks Rank #2.
W.W. Grainger, Inc. (GWW - Free Report) distributes maintenance, repair and operating supplies as well as other related products and services. This Lake Forest, IL-based company’s expected sales growth rate for 2018 is 7.9% and it sports a Zacks Rank #1.
ON Semiconductor Corporation (ON - Free Report) , headquartered in Phoenix, AZ, manufactures and sells semiconductor components for various electronic devices. Its current-year expected sales growth rate is 5.1% and the stock carries a Zacks Rank #2.
Headquartered in Detroit, MI, DTE Energy Company (DTE - Free Report) is engaged in the utility operations. The company’s expected sales growth rate for 2018 is 3.2% and it carries a Zacks Rank #2.
CBRE Group, Inc. (CBRE - Free Report) is a commercial real estate services and investment company. This Los Angeles, CA-based company’s sales are expected to increase at the rate of 47.3% for 2018.The stock 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 Worth Investing in Now on Impressive Sales Growth
Sales growth is an important metric for any company as it is a vital part of growth projections and is instrumental in strategic decision-making. By monitoring this key metric over multiple time periods, one can clearly understand a company’s growth trend.
Sales growth is essential to justify the fixed and variable expenses incurred to operate a business. Low revenues often lead to an unprofitable business and negative financial results. Stagnant companies may generate near-term profit, but can’t rev up enough growth to attract new investors.
Also, in a growing economy, lack of rise in sales most likely denotes that the company is not gaining market share over its competitors. In simple terms, some sustained sales growth is necessary to support the bottom line.
Focusing solely 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. Therefore, 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 sufficient cash position indicates that revenues are being channelized in the right direction.
Picking 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 more 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 (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 for it.
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 18 stocks that qualified the screening:
Based in Dallas, TX, AT&T Inc. (T - Free Report) provides communications and digital entertainment services. Expected sales growth rate for the current year is 8% and the stock carries a Zacks Rank #2.
W.W. Grainger, Inc. (GWW - Free Report) distributes maintenance, repair and operating supplies as well as other related products and services. This Lake Forest, IL-based company’s expected sales growth rate for 2018 is 7.9% and it sports a Zacks Rank #1.
ON Semiconductor Corporation (ON - Free Report) , headquartered in Phoenix, AZ, manufactures and sells semiconductor components for various electronic devices. Its current-year expected sales growth rate is 5.1% and the stock carries a Zacks Rank #2.
Headquartered in Detroit, MI, DTE Energy Company (DTE - Free Report) is engaged in the utility operations. The company’s expected sales growth rate for 2018 is 3.2% and it carries a Zacks Rank #2.
CBRE Group, Inc. (CBRE - Free Report) is a commercial real estate services and investment company. This Los Angeles, CA-based company’s sales are expected to increase at the rate of 47.3% for 2018.The stock 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 »