You’d think it would be rather easy to pick winning stocks in a market that surged over 40% in about three months. But this coronavirus is sticking around a lot longer than we hoped, which has made the environment profitable but very uncertain.
The best way to improve your odds for success is to find names with several characteristics moving in the right direction. Rising earnings estimates is great, but it’s even better if broker ratings and price momentum are trending upward as well. And a low price-to-sales ratio helps too.
The Increasing Estimates, Ratings & Prices screen looks for all of that. Below are three stocks that recently passed the test. Make sure to click here for the full list to see all the names.
Thor Industries (THO - Free Report)
There’s a way to travel during this pandemic that doesn’t include rubbing elbows with the potentially unkempt masses on public transportation or even in hotels.
It’s the recreational vehicle (RV) lifestyle. In fact, the Building Products – Mobile Homes and RV Builders space is in the top 1% of the Zacks Industry Rank. And one of the biggest proponents of this way of life is Thor Industries (THO - Free Report) .
It makes complete sense, doesn’t it? You don’t have to wonder if the guy who coughed behind you on the plane is sick or just clearing his throat. Nor do you have to worry what kind of nomad used that comforter before you. Because it’s your comforter! Your utensils, your toilet seat, your germs in the air, etc. Does something smell weird? Don’t worry. It’s probably you!
Shares of THO have climbed approximately 184% since the coronavirus low on March 23. However, this company surely felt an impact from the pandemic, especially in the usually busy months of March and April. Showrooms were closed and layoffs were made.
But there’s been pent-up demand since then, and analysts believe it will continue.
THO reported third quarter earnings per share of 43 cents, which marked a positive surprise of 200%. Revenue of $1.68 billion beat our expectations by approximately 18.5%.
And the fourth quarter could prove to be even better. Sales and backlog in May improved on a weekly basis as dealers reopened and consumers desperate for a vacation put their money to work. A lot of them have probably been thinking about this for years and now the pandemic finally convinced them to take the plunge.
The Zacks Consensus Estimate for this fiscal year, ending July 2020, jumped 117% in the past two months to $3.32. Expectations for next fiscal year, ending July 2021, advanced 37.5% to $5.46 in that time.
Therefore, analysts currently expect earnings growth of 64.5% for next year over this one.
By the way, this isn’t just your grandparents’ mode of travel anymore. The industry has seen younger folks being tempting by the RV lifestyle as part of a “stay-in-RV” economy.
Canadian Solar (CSIQ - Free Report)
If you’re from up north in Canada, then you really shouldn’t take the sun for granted. The best thing to do is store up as much power as possible from the hottest star in the solar system and use it to provide clean energy wherever its needed.
So Canadian Solar (CSIQ - Free Report) has the right idea. It’s one of the largest solar power companies in the world. It manufacturers solar photovoltaic modules and provides solar energy solutions with a geographically diversified pipeline in various stages of development.
Shares have gained over 65% since the coronavirus low on March 23. The sickness definitely clouds up the company’s outlook moving forward, but it just delivered a solid first-quarter report that included year-over-year improvement and better-than-expected results.
CSIQ reported earnings per share of $1.40, which topped the Zacks Consensus Estimate by about 20.7%. It has beaten our expectations in six out of the past seven quarters.
Total revenue of $825.6 million also eclipsed the Zacks Consensus Estimate by 3.9%, while topping last year’s $484.7 million by more than 70%. The company benefitted from solid module shipments and project sales.
Specifically, total module shipments of 2,214 MW improved by 41% from 1,575 MW last year.
The pandemic caused CSIQ to withdraw its 2020 financial guidance, but it still expects total solar module shipments for the year between 10 GW and 12 GW. Plus, the company said demand remained relatively strong heading into the second quarter.
Over the past 60 days, analysts have boosted their expectations for this year by 30% to $2.69. The consensus for next year has improved only 2% in that time to $3, but that suggests year-over-year improvement of 11.5%.
Vista Outdoor (VSTO - Free Report)
Getting outside of the house has never been more important than during this pandemic. There’s only so much Netflix to watch or rooms to redecorate. And let’s face it, the family is great but they can get tiring after a while just like anything else.
Sooner or later, you’ve got to get out there to keep your sanity… and that’s why a name like Vista Outdoor (VSTO - Free Report) is so essential.
The company is a global designer, manufacturer and marketer of consumer products in the outdoor sports and recreation markets. It’s split into two segments, Shooting Sports and Outdoor Products, and sells anything you’ll need for a hunting trip, hiking excursion, camping trip, or the like.
So how much do people need the great outdoors right now? VSTO’s space, Leisure & Recreation Products, is in the top 2% of the Zacks Industry Rank.
In May, the company reported fiscal fourth-quarter earnings of 11 cents per share, which bettered the Zacks Consensus Estimate by a healthy 57%. However, sales of $426 million fell short of expectations and last year’s result.
VSTO only felt comfortable enough to provide guidance for its fiscal first quarter. It includes sales between $370 million and $400 million with earnings per share between a five-cent loss and breakeven.
Though the company is wrapped up in coronavirus uncertainty, analysts are still expecting big things moving forward. The Zacks Consensus Estimate for this fiscal year (ending March 2021) has improved 5.4% in the past 60 days to 39 cents.
And its even better for next fiscal year (ending March 2022), as the Zacks Consensus Estimate has advanced 25% in that time to 50 cents, which suggests year-over-year improvement of more than 28%.
Zacks Top 10 Stocks for 2020
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