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Find Strong Stocks with this First Profit Screener
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Stocks dipped slightly through mid-morning trading Tuesday as Wall Street continues to sell bonds that have pushed the 10-year U.S. Treasury to levels not seen in over a year. The story has largely remained the same since the Nasdaq began its selloff after it hit new records on February 12. Investors are betting that a huge economic comeback in the U.S. will bring about increased inflation.
The U.S. economy is projected to grow by roughly 6% in 2021, with other estimates from some of the big banks calling for even larger growth. The huge expansion, which would mark the largest in years, will be driven by the natural economic recovery, coupled with the coronavirus vaccine distribution, the injection of trillions of dollars into the U.S. economy, and the Fed’s easy money policy.
The current environment has given rise to inflation worries. But even at 1.75%, the 10-year U.S. Treasury remains ultra-low by historical standards and well off the 3% levels it hit in 2018. This might call into question rising technology valuation, yet it hardly screams we have reached the end of there is no alternative investing.
Despite some of the recent worries and the tech selling that pushed the Nasdaq into a correction, the fundamentals remain strong. This is boosted by an improving earnings picture, high levels of consumer confidence, and more (also read: A Very Strong Q1 and 2021 Earnings Picture).
Let’s not forget that the S&P 500 has soared 55% in the last 12 months, with the Nasdaq up 65%. Therefore, the recent pullbacks and choppy movement seem healthy and appropriate. With this in mind, let’s use our ‘First Profit’ screener to help find strong stocks to consider as we get closer to the first quarter 2021 earnings season that could be the next market catalyst…
First Profit
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 50 stocks that made it through this week's screen…
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.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
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.
It's hard to believe, even for us at Zacks. But from 2000-2020, while the market gained +6.6% per year, our top stock-picking strategy averaged +52.4% per year.
How has that screen done lately? From 2016-2020, it more than tripled the market's +103.9% gain with a soaring +381.1% return.
Image: Shutterstock
Find Strong Stocks with this First Profit Screener
Stocks dipped slightly through mid-morning trading Tuesday as Wall Street continues to sell bonds that have pushed the 10-year U.S. Treasury to levels not seen in over a year. The story has largely remained the same since the Nasdaq began its selloff after it hit new records on February 12. Investors are betting that a huge economic comeback in the U.S. will bring about increased inflation.
The U.S. economy is projected to grow by roughly 6% in 2021, with other estimates from some of the big banks calling for even larger growth. The huge expansion, which would mark the largest in years, will be driven by the natural economic recovery, coupled with the coronavirus vaccine distribution, the injection of trillions of dollars into the U.S. economy, and the Fed’s easy money policy.
The current environment has given rise to inflation worries. But even at 1.75%, the 10-year U.S. Treasury remains ultra-low by historical standards and well off the 3% levels it hit in 2018. This might call into question rising technology valuation, yet it hardly screams we have reached the end of there is no alternative investing.
Despite some of the recent worries and the tech selling that pushed the Nasdaq into a correction, the fundamentals remain strong. This is boosted by an improving earnings picture, high levels of consumer confidence, and more (also read: A Very Strong Q1 and 2021 Earnings Picture).
Let’s not forget that the S&P 500 has soared 55% in the last 12 months, with the Nasdaq up 65%. Therefore, the recent pullbacks and choppy movement seem healthy and appropriate. With this in mind, let’s use our ‘First Profit’ screener to help find strong stocks to consider as we get closer to the first quarter 2021 earnings season that could be the next market catalyst…
First Profit
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 50 stocks that made it through this week's screen…
ArcelorMittal (MT - Free Report)
Alcoa Corporation (AA - Free Report)
Upwork Inc. (UPWK - 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.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
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/.
Zacks' Super Screen
It's hard to believe, even for us at Zacks. But from 2000-2020, while the market gained +6.6% per year, our top stock-picking strategy averaged +52.4% per year.
How has that screen done lately? From 2016-2020, it more than tripled the market's +103.9% gain with a soaring +381.1% return.
Free – See the Stocks It Turned Up for Today >>