Advanced Drainage Systems (WMS - Free Report) is a Zacks Rank #1 (Strong Buy) and it sports the growth divergence that I love to see. I see a D for Value and an A for Growth and right away I know that I am on the right path. Let's take a deeper look at this stock as it is the Bull of the Day.
This building products name is very strong here, one of the names that continues to pop up on the list of new 52 week highs. This is what I have been talking about in the newsletter services I run -- sticking with the winners.
Earnings History
The earnings history isn’t that good here. But we don’t buy stocks based on the earnings history. This stock has missed 3 of the last 4 quarters, but the most recent report was a beat of the Zacks Consensus Estimate.
The most recent report was the lone beat and it was a big one. The company reported $0.83 in EPS when $0.65 was expected. That 18 cent beat translates into a positive earnings surprise of 27%.
Estimate Revisions
I see a slew of positive earnings estimate revisions.
This quarter as moved from 78 cents to 97 cents over the last 30 days.
Next quarter has more than tripled, moving from 11 cents to 37 cents.
The full year numbers has jumped from $1.53 to $2.43
Next year is looking good too, moving from $1.43 to $2.34.
I would expect next year to show some earnings growth after the next report as there will be better visibility.
Valuation
So there is an issue here, I see the forward PE at 23x which is not terrible. The 6.6x book multiple is the issue. That is a lot even for a name like this that is growing at 23% on the topline. The 2.2x sales is a good spot to be at and margins are headed in the right direction.
Operating margins went from 3.45% to 5.7% and that is just what we like to see. Net margins have moved from -11% to 5.71% again, just what we like to see.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Advanced Drainage Systems (WMS - Free Report) is a Zacks Rank #1 (Strong Buy) and it sports the growth divergence that I love to see. I see a D for Value and an A for Growth and right away I know that I am on the right path. Let's take a deeper look at this stock as it is the Bull of the Day.
This building products name is very strong here, one of the names that continues to pop up on the list of new 52 week highs. This is what I have been talking about in the newsletter services I run -- sticking with the winners.
Earnings History
The earnings history isn’t that good here. But we don’t buy stocks based on the earnings history. This stock has missed 3 of the last 4 quarters, but the most recent report was a beat of the Zacks Consensus Estimate.
The most recent report was the lone beat and it was a big one. The company reported $0.83 in EPS when $0.65 was expected. That 18 cent beat translates into a positive earnings surprise of 27%.
Estimate Revisions
I see a slew of positive earnings estimate revisions.
This quarter as moved from 78 cents to 97 cents over the last 30 days.
Next quarter has more than tripled, moving from 11 cents to 37 cents.
The full year numbers has jumped from $1.53 to $2.43
Next year is looking good too, moving from $1.43 to $2.34.
I would expect next year to show some earnings growth after the next report as there will be better visibility.
Valuation
So there is an issue here, I see the forward PE at 23x which is not terrible. The 6.6x book multiple is the issue. That is a lot even for a name like this that is growing at 23% on the topline. The 2.2x sales is a good spot to be at and margins are headed in the right direction.
Operating margins went from 3.45% to 5.7% and that is just what we like to see. Net margins have moved from -11% to 5.71% again, just what we like to see.
Chart
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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