The Dow climbed to a record on Tuesday, while both the Nasdaq and the S&P 500 touched new highs before pulling back slightly during regular trading. All three major U.S. indexes have continued to break new ground in February after stocks quickly recovered from their late-January pullback, with the S&P now up over 6% since January 29.
Bullish investors have pushed stocks to new highs as the Fed recommits to its low interest rate policy. Wall Street has also grown more convinced about the possibility of increased government spending as some of the hardest-hit areas of the economy continue to struggle.
Despite some setbacks, vaccine distribution rolls on and it will hopefully help people in the U.S. and around the world return to something closer to normal by late summer, if not sooner. Plus, the fourth quarter earnings season has been rather impressive and executives continue to provide upbeat guidance (also read:
Earnings Estimates Keep Going Up).
With this backdrop in mind, let’s utilize our ‘First Profit’ screen to help find stocks that might be worth buying…
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 nearly 60 stocks that made it through this week's screen… Pinterest, Inc. PINS Cloudera, Inc. ( CLDR Quick Quote CLDR - Free Report) Alcoa Corp. AA
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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