Stocks jumped on Tuesday to bounce back after starting the new year off on the wrong foot on Monday. Wall Street likely used the first trading day of 2021 as a chance to take home some profits after the market ended the year on a solid two-month run. The climb came as investors look to Georgia, which will determine if there will be gridlock in Washington.
More broadly, the new U.S. stimulus bill and the rollout of the coronavirus vaccine in the U.S. and around the world has helped boost market sentiment. And with a backdrop of improving earnings and low interest rates, the bull case for 2021 appears relatively straightforward.
With this in mind, let’s use our ‘First Profit’ screener to help find strong stocks to consider buying in 2021…
The idea is to search for companies that recently reported their first quarterly profit. More specifically, the screen searches for firms that just posted their first profit last quarter, after not posting a profit for at least the previous four quarters.
Finding companies that recently reported their
first profits help investors find stocks that can prove to be big winners. These companies may vary widely. Some of the firms might be new, and this recent profit is perhaps the only profit in its short history.
Meanwhile, other companies might have held an impressive and long history of quarterly profitability, but for whatever reason haven't seen a profit in a while. Therefore, the return to profit could spark a turning point that management had promised or Wall Street had been clamoring for.
The concept is relatively simple: if the trend has been one of improvement, there is a solid chance the trend will continue. This is true whether a company has been profitable, or is just reaching that key inflection point.
And that’s what we are screening for today…
• EPS for the previous 4 Quarters less than or equal to 0
(This means in each of the previous 4 quarters (except the most recently reported quarter) the company has reported earnings of less than or equal to zero, i.e., no profit.)
• EPS for the recently reported quarter greater than 0
(This time, the company reported earnings greater than zero, meaning they finally showed a profit.)
• Current Price greater than or equal to 5
(Stocks that are trading for less than $5 are more speculative.)
The screen is pretty simple, yet powerful. Here are
3 of the over 40 stocks that made it through this week's screen… Cloudera, Inc. ( CLDR Quick Quote CLDR - Free Report) Roku, Inc. ( ROKU Quick Quote ROKU - Free Report) Workday, Inc. ( WDAY Quick Quote WDAY - Free Report)
Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.
Click here to sign up for a free trial to the Research Wizard today.
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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/ .
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