Well, the earnings recession is over, the last jobs report was strong and investors are showing the least amount of fear (per the VIX) since the early ninties. Yet, stocks seem to be stuck these days. What great news for investors!
Remember, a stock making new highs is likely to continue making new highs until something stops the trajectory. This is especially the case during a bull market, which we are most certainly still in. So if stocks are going to just run in place amid all this great news, then savvy investors will have a lower bar to beat if they keep from getting too frustrated and look at the big picture.
This is where the "Market Beating Growth Stocks" screen comes in. It looks for Zacks Rank #1s (Strong Buys) that have a Zacks Style Score of "A" for Growth and projected EPS growth of 20% or more.
Today's article has three stocks from this screen that were beating the market when stocks were soaring, and should continue to do so regardless of which way the tides take us next.
Applied Optoelectronics (AAOI - Free Report)
It’s been an amazing start to 2017 for Applied Optoelectronics (AAOI - Free Report) . Not only did this advanced fiber-optic device maker report the highest earnings and revenue in its history earlier this month, but it has also gained approximately 145% year to date. Its industry (Electronics-Semiconductors) has ‘only’ advanced 18.22% thus far in 2017. Its end markets include cable television broadband and fiber-to-the-home, but most of its success can be attributed to its Internet data centers end market.
AAOI has beaten the Zacks Consensus Estimate for five straight quarters now, and in seven of the past eight. It has put together an average surprise of more than 118% in the past four quarters. Most recently (May 4th), it reported earnings per share of $1.02 that beat our expectations by nearly 7.4%. Total revenue soared by 91% to $96.2 million. For the current quarter (Q2), it expects revenue to hit a new record of between $106 million and $112 million with earnings per share of $1.09 to $1.19.
The strong quarter made a noticeable impact to its earnings estimates. Over the past 30 days, the Zacks Consensus Estimate for this year is up 19.7% to $3.76 as all four covering analysts raised their estimates. The Zacks Consensus Estimate for next year is at $4.05, which is up 9.8% in that time and suggests year-over-year growth of 7.7%. Over the past three months, estimates have soared 111% for this year and 152% for next.
The Chemours Company (CC - Free Report)
The Chemours Company (CC - Free Report) has only been a publicly-traded company since 2015…but 2017 may be the year when this global chemistry company really makes its mark. The stock is already up 82.3% this year and its earnings estimates have been soaring since announcing a strong quarterly report. CC is part of the Chemical – Diversified industry, which is in the top 8% of the Zacks Industry Rank.
CC has an average beat of 39.8% over the past four quarters even though it missed the Zacks Consensus Estimate in the fourth quarter. But it certainly didn’t miss when reporting first-quarter numbers on May 1. Earnings per share of 75 cents beat our expectations by more than 53%. Revenue jumped 11% to $1.4 billion. The company now expects adjusted EBITDA between $1.15 billion and $1.25 billion for 2017. CC gave a lot of credit for the success to its transformation plan announced in August 2015, which included reducing structural costs, growing market positions, optimizing its portfolio, refocusing investments and enhancing its organization.
Earnings estimates have moved sharply higher in the past week. The Zacks Consensus Estimate for this year is up 14.8% in that time to $3.33, while next year has advanced 11% to $3.92. So for right now, analysts expected earnings growth of 17.7% for 2018 over 2017. Over the past three months, estimates have soared 58.6% and 55% for this year and next, respectively. “Guided by our transformation plan, we believe we are well positioned for the remainder of 2017, as we continue to strengthen our businesses and benefit from positive market conditions,” said CC President and CEO Mark Vergnano.
MasTec (MTZ - Free Report)
With a solid economy and hopes for increased infrastructure spending at some point, MasTec (MTZ - Free Report) is in a sweet spot right now. This construction company focuses on communications, energy and utility infrastructure, and boasts “multi-year growth opportunities and momentum in numerous markets”. Its earnings history certainly bears that out. The company has beaten earnings estimates for six straight quarters now, amassing an average surprise of 34.1% in the past four. Plus, shares are up 19.5% year to date, which is well ahead of its highly ranked industry (Building Products – Heavy Construction, Top 37%).
Earlier this month, MAS reported earnings per share of 56 cents, which beat the Zacks Consensus Estimate by 19.2%. Net sales of $1.2 billion also beat our estimates of $1.06 billion, while improving 19% from last year. It had a record 18-month backlog level of $5.7 billion. Most importantly, though, was its guidance for 2017. The company now expects adjusted earnings per share of $2.45, marking a ten-cent revision to the upside and suggesting year-over-year improvement of 29%. Revenue is now expected at $5.7 billion instead of the earlier guidance at $5.5 billion.
Earnings estimates have been on a steady rise for a while now. MAS is expected to earn $2.31 for this year, which is 16.7% higher than three months ago. The Zacks Consensus Estimate for next year is currently at $2.46, a year-over-year improvement of 6.5% and up from 7.9% three months back. Analysts responded favorably to last month’s report, as estimates have risen 1.8% for this year and nearly 1% for next in just the past 7 days.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains.
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