It was a great earnings season…even if the market didn’t always come along for the ride. But stocks have perked up a lot in the past month or so, giving growth names more opportunity to spread their wings and bring the profits that we expect.
Small caps have finally been flexing their muscles a bit, but the large caps are still leading the way and have a chance for further improvement as we recovery from the three-month correction. The Top Ranked Growth Stocks on the Move screen is a great tool to find those stocks that are poised to advance after solid reports during a more cooperative market.
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.
Below are three larger names that were recently in the list. But make sure you click the link above to see all of this screen’s parameters and the current list.
Mastercard (MA - Free Report)
The economy is strong and the consumers are confident. The market has even turned around in recent days after a three-month correction. For millions of shoppers across the country...it's time to spend some money!
A lot of money from open wallets and purses found its way to Mastercard (MA - Free Report) in its recently-reported first quarter results, which included record results for earnings and revenue. The global payments giant is in a sweet spot right now as part of the financial transaction services industry; a space this is ranked in the top 36% of the Zacks Industry Rank with the 91st spot out of 256.
The industry is up approximately 14% year to date...but MA has climbed by nearly 28% in that time. It has an enviable streak of positive earnings surprises that continued in the first quarter.
Adjusted earnings per share reached $1.50 per share, marking a gain of 43% from the previous year and easily topping the Zacks Consensus Estimate of $1.26 by more than 19%. Over the past four quarters, the average surprise in now practically 9%. Thanks to rising consumer spending and confidence, revenues of $3.6 billion also beat our expectations at $3.25 billion while also improving 27% from last year.
Earnings estimates for this Zacks Rank #1 (Strong Buy) have taken off since the report. The Zacks Consensus Estimate for this year is up to $6.22 per share, which has advanced 4.7% in just the past 30 days. Analysts expect earnings to grow a further 16.6% in 2019 to $7.25, marking a gain of 4.1% from a month ago.
E*Trade (ETFC - Free Report)
Most of the recent quarter fell victim to the market's first real correction in years. You might think that would be horrible news for a company like E*Trade (ETFC - Free Report) ...but its quarterly report showed that wasn't the case. In fact, it put together its strongest quarterly revenues in its history. Basically, brokers make money on increased buying AND selling, which explains why the company's daily average revenue trades (DARTs) jumped 26% year-over-year.
Earnings per share in the quarter reached 88 cents per share, which beat the Zacks Consensus Estimate by 11.4%. It was the company’s 11th straight positive surprise, and the 20th beat in the past 21 reports! It now has an average positive surprise of 7.7% in the last four quarters.
Increased trading activity led to a 28% improvement in revenues to $708 million, which also surpassed our expectations at $690 million. Total DARTS were at 309,000, up 26% from last year, while customer accounts increased 4% to 5.5 million.
ETFC is in the highly ranked industry of Financial – Investment Bank, which is in the top 18% of the Zacks Industry Rank with the 46th spot out of 256. The industry is up nearly 8% this year, but the stock has advanced about 32.5% in the same amount of time.
Zacks Consensus Estimates have been on the rise for a while now. Going back three months, earnings estimates for this year have climbed 11.6% to $3.64 per share. That includes a 1.1% advance in just the past 30 days thanks to the strong quarterly performance. Analysts expect earnings for next year to grow 12% to $4.08 per share. The consensus has gained 10.6% in three months and 2% in the past 30 days.
UnitedHealth (UNH - Free Report)
A strong U.S. economy and historically low unemployment is music to the ears of the health insurance industry. Sure, this space handles economic pressures better than most, but it participates in healthy markets just like any other area.
The medical – HMOs space, for example, is in the top 23% of the Zacks Industry Rank with the 58th spot out of 256 industries. It is up about 8.7% year to date as it enjoys rising enrollment due to a cooperative economy, an unemployment rate below 4% and longer-living customers, among other reasons. This success was on full display when one of its biggest participants reported first quarter results late last month.
UnitedHealth Group (UNH - Free Report) has a great history of positive earnings surprises that stretches back for years. The trend continued in the first quarter when adjusted earnings per share of $3.04 topped the Zacks Consensus Estimate by 4.1% while improving year over year by more than 28%.
Revenues of $55.2 billion also topped the Zacks Consensus Estimate at $54.9 billion, while also improving from last year by more than 13%. Revenues for its health benefits segment, UnitedHealthcare, rose 13.3% and Optum improved 11.1%.
Thanks in large part to these results, UNH has easily outperformed its industry by gaining 10.2% so far this year.
The company raised its 2018 earnings expectations to between $12.40 and $12.65, compared to the previous guidance of $12.30 to $12.60. All 10 analysts responded to the quarter and the outlook by raising their expectations for this year. The Zacks Consensus Estimate has advanced 1.1% over the past 2 months to $12.61 per share.
Earnings are then expected to jump 13% in 2019 to $14.26 per share. This consensus has improved 1.8% in the past two months.
Wall Street's Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.
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