There are no certainties in the market. Even if your stock reports strong quarterly results, it’s no guarantee that it will lead to higher share prices. Your best bet is to play the odds…and Zacks has just the screen for you!
It may be a mouthful, but the “Top Ranked Growth Stocks on the Move” premium screen is a great way to find high probability stocks that have been outperforming and should continue to do so. Many of Zacks’ best investment tools are in the parameters of this screen. Zacks Rank #1s and #2s? Check. Top 50% of the Zacks Industry Rank? Check. Zacks Growth Style Scores of As and Bs? Check. Plus, it also uses average broker ratings, positive surprises, favorable valuations and positive price momentum to round out its list.
Today we’ve highlighted three names that have passed this tough criteria.
Huntsman Corporation (HUN - Free Report)
This global manufacturer of differentiated chemicals was already impressing the market with its enviable record for beating quarterly earnings estimates, but it’s in the process of taking a big step to becoming a player in one of the best-ranked industries in the market. Late last month, HUN and Clariant announced a merger of equals that would create a leading global specialty chemical company with an enterprise value of about $20 billion with sales of approximately $13.2 billion and an adjusted EBITDA of $2.3 billion. Huntsman shareholders will receive 1.2196 shares in the combined company (known as HuntsmanClariant) for each Huntsman share. It is expected to close by the end of the year.
One look at Huntsman’s history, you can tell that Clariant is pretty good at picking partners. HUN has beaten the Zacks Consensus Estimate for nine straight quarters now, and in 14 out of the last 15 quarters. Most recently, it reported 57 cents per share in its first quarter, which was 50% better than the 38-cent estimate. The company has amassed an average surprise of more than 20.1% over the past four quarters. Revenues improved by nearly 5% from last year to $2.47 billion, which was also ahead of our expectations at $2.45 billion as nearly all business segments outperformed. HUN is still planning to IPO its Pigments and Additives business (known as Venator) this summer.
The past two months have seen four of the five covering analysts raise their expectations on HUN. The Zacks Consensus Estimate for this year has climbed 17.2% in that time to $2.18 per share. Before the merger was announced, earnings estimates for 2018 had jumped nearly 16% to $2.47, which also suggested growth of more than 13% over 2017.
Broadcom Ltd. (AVGO - Free Report)
This semiconductor device supplier continues to benefit from the synergies of its merger with Avago in 2015. The company remains very active in the M&A space and is in the process of acquiring Brocade in a deal that should be concluded by the end of next month. AVGO’s expanding portfolio will be one of its main catalysts moving forward, since its increasing breadth mitigates operating risks and lessens exposure to any single market. AVGO is likely to continue driving profitability from such moves (especially Avago) for the foreseeable future, which was on full display in its fiscal second quarter report from early this month.
Earnings per share reached $3.31 in the quarter, or about 9.6% better than the Zacks Consensus Estimate at only $3.02. It has now surprised for 12 straight quarters and has only missed once in the past 5 years. The four-quarter average beat is around 6.7%. Revenue of $4.19 billion was 18% better than last year and a bit ahead of Zacks expectations at $4.105 billion. Looking toward FQ3, AVGO expects revenues of about $4.45 billion, or 6% better than the sequential quarter. For the rest of this fiscal year, top-line growth is expected to be driven by seasonal strength in broadband access and sustained spending in cloud data centers.
Earnings estimates have enjoyed a nice bump higher in the past 30 days. The Zacks Consensus Estimate for this fiscal year (ending October 2017) has increased 6.9% in that time to $13.78 per share. Analysts expect AVGO’s profit to improve more than 10% next fiscal year (ending October 2018) to $15.20, which has also expanded by 7% in the past month.
Weight Watchers International, Inc. (WTW - Free Report)
Never underestimate the power of Oprah. WTW has been on a roll ever since the media mogul took a stake in the company and became its spokesperson. It has surged by nearly 200% this year, and reported a strong quarter last month that included positive surprises on the top and bottom lines along with a raised guidance. Next month, WTW gets a new captain when Mindy Grossman becomes the President and CEO. Ms. Grossman comes from HSN where she “ transformed the HSN brand into a lifestyle network, launched industry-leading digital innovations and formed unique and successful partnerships with leading brands and personalities.” Now that the company has turned the corner, it’s clear to see where it plans to go in the future.
Last month, WTW completed its third straight quarterly beat…and this one was the most impressive yet. The company lost only one cent per share, but the Zacks Consensus Estimate was expecting a five-cent loss. Therefore the surprise was 80%! The average quarterly beat over the last four quarters is around 24.3%. Revenues climbed 8.7% to $329.1 million. End-of-period subscribers were up 16% thanks to growth in all major geographic markets. But here at Zacks, we were most impressed with WTW boosting its full-year fiscal 2017 earnings guidance to between $1.40 and $1.50.
For a well-known company that’s on the move, WTW is still underrepresented in the market. Nevertheless, earnings estimates are on the rise. The Zacks Consensus Estimate for this year is only up 2.4% in the past two months to $1.28 per share. However, next year is looking different with earnings expected to jump from 2016 by 23% to $1.58. That’s nearly 20% better than 2 months ago.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research.
See the stocks free >>