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3 Growth Stocks to Watch This Earnings Season

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It’s perhaps the only downside to an eight-year bull market that’s still hitting new highs with no end in sight: How do you find growth in an environment like this? You could wait for one of those healthy pullbacks, but this market is so strong that they are usually pretty tame and short lived.

Another possibility is to use a screen that finds the growth regardless of what the market does. Fortunately, that’s exactly what the Zacks #1 Rank Growth Stocks screen is all about. It finds stocks that have a minimum historical growth rate of at least 20% and, more importantly, a projected growth rate of 20%. On top of all that, it only picks Strong Buys.

Below are three stocks that have been on the list recently, but it’s only a fraction of the full list. Click the link above to discover all the names that passed this screen’s criteria.

The Charles Schwab Corporation (SCHW - Free Report)

Things were going just fine for The Charles Schwab Corporation (SCHW - Free Report) before tax reform passed, as the famed financial services company was enjoying an increase in retail investors amid this strong economy. But then the corporate tax rate plunged from 35% to 21%, sending earnings estimates soaring by double-digits over the past month. And just for good measure, SCHW recently reported strong quarterly numbers.

The company is part of the financial – investment bank space, which puts it in the top 13% of the Zacks Industry Rank with the 32nd spot out of 256. The industry has advanced approximately 25% over the past year, but SCHW easily has that beat with nearly 31% improvement in that time.

Earnings estimates had been loitering around prior to the big news out of Washington. Afterwards, the Zacks Consensus Estimate for this year (ending December 2018) jumped to $2.39 per share, marking an improvement of 18.9% from one month ago. Now analysts expect earnings for next year (ending December 2019) to jump a further 17.2% to $2.80. That guidance has advanced 23.9% in 30 days.

Part of that improvement should be attributed to SCHW’s fourth-quarter report from earlier this month. Earnings per share of 44 cents improved 22% from last year and beat the Zacks Consensus Estimate by 7.3%. The company hasn’t missed estimates in 3 years now; its last 11 quarters included 6 beats and 5 meets. Net revenues jumped 14% year over year to $2.24 billion, which was in line with Zacks Estimates. New retail brokerage accounts rose 36% to 248,000, while total accounts were up 4% to 7.4 million. In the past 7 days, earnings estimates for this year and next are up 2.6% and 3.7%, respectively.



Dollar Tree, Inc. (DLTR)

Even with a strong economy and historic bull market, consumers just can’t pass up a good deal at the register. That’s why the retail-discount stores industry is in the top 21% of the Zacks Industry Rank with the 53rd spot out of 256. Dollar Tree, Inc. (DLTR) is one of the biggest reasons why this space has taken off. The discount retailer is a Zacks Rank #1 (Strong Buy) thanks to rising earnings estimates and has jumped by nearly 53.4% in the past 12 months. Who says brick-and-mortar retailers are dead?

Retailers generally bring up the rear of earnings season, so we still have a few weeks before DLTR reports again in early March. At the time, it will be going for a third straight positive surprise. The company posted earnings per share of $1.01 in its fiscal third quarter, beating the Zacks Consensus Estimate by 12.2% and jumping more than 40% from last year. It now has a four-quarter average of 7.4% and has topped expectations in five of the last seven quarters.

Consolidated net sales also beat our expectations, rising 6.3% to $5.32 billion. The Zacks Consensus Estimate was at $5.28 billion. Same-store sales increased 3.2% thanks to improved customer count and average ticket. Most impressive, though, at a time when e-commerce is fundamentally shifting the retail landscape and closing many traditional store concepts, DLTR actually opened 169 outlets during the quarter and shuttered only 6.

The company raised its guidance for fiscal 2017 and expects fiscal fourth quarter sales between $6.32 billion and $6.43 billion. Earnings are seen at $1.80 to $1.89 for the quarter.

The Zacks Consensus Estimate for this fiscal year (ending this month) is $4.85 per share, which has gained 4% in the past three months. Earnings estimates haven’t moved much in the past 60 days, but analysts are expecting a lot more improvement next year. The Zacks Consensus Estimate for next fiscal year (ending January 2019) is currently $5.70, marking a 17.5% improvement from the previous year. Earnings estimates are up 9% in just the past 30 days.


Dollar Tree, Inc. Price, Consensus and EPS Surprise

Dollar Tree, Inc. Price, Consensus and EPS Surprise | Dollar Tree, Inc. Quote


Marriott International (MAR)

At a time with low unemployment, a hot market and a strong economy, why not take a trip? And if you have a few extra bucks to spend, then you might as well stay with a company that really knows what it’s doing. Marriott International (MAR) is the world’s largest hotel company with brands like Ritz-Carlton, Renaissance Hotels and Fairfield Inn & Suites, among many others. The hotels and motels industry has gained more than 50% in the past year, leaving it a space in the top 28% of the Zacks Industry Rank with the 71st spot out of 256. But MAR has jumped nearly 75% in that time!

The biggest news for Marriot in the past couple of years was its acquisition of Starwood Hotels and Resorts Worldwide, which was a huge hotelier in its own right. The merger was finalized in September 2016, giving MAR even more brands such as Westin, Sheraton and W, among many others. It intends to keep Starwood’s expansion rate at the same level, which means those brands aren’t going anywhere.

MAR will report again on February 14. The company has beaten the Zacks Consensus Estimate for 15 straight quarters, and its positive Earnings ESP suggests that analysts believe this trend will continue. Last time, earnings per share came to $1.10 for the third quarter. The result was 26% better than last year and more than 12% atop of the Zacks Consensus Estimate of 98 cents. The four-quarter average is now 9.1%. Total revenue jumped 46% to $5.66 billion, which was also ahead of our expectations. But perhaps more importantly, revenue per available room for worldwide same-system wide properties were up 2.4%.

Earnings estimates for 2017 hadn’t moved in the past 2 months, but are up 2.7% from three months earlier. But 2018 is a different story. The Zacks Consensus Estimate expects earnings for this calendar year to jump more than 21% to $5.16 from the previous year’s $4.24. The estimates has climbed 7.7% in just the past month.


Marriott International Price, Consensus and EPS Surprise

Marriott International Price, Consensus and EPS Surprise | Marriott International Quote


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