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Use this 'First Profit' Screen to Find Strong Stocks for 2022

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The Nasdaq slipped 0.56% during regular trading Tuesday, while the S&P 500 fell 0.10%. The moves came after both surged 1.4% to start the final week of 2021. The slight slip came amid a broader bullish push that kicked up again after it became clear last week that the U.S. isn’t headed for nationwide lockdowns amid a rise in covid cases.

The ability for the U.S. economy to work its way through the recent Omicron wave and continue the broader comeback has Wall Street seeing green. The Nasdaq climbed back above its 50-day moving average to end the Christmas-shortened week, lagging only a few sessions behind the S&P 500.

The benchmark posted its 69th record close of the year on Monday, and Wall Street seems determined to keep the Santa Claus rally going. Investors are pleased that the outlook for S&P 500 earnings and margins have remained strong and resilient in the face of rising prices. Plus, interest rates are set to remain historically low even when the Fed begins to raise them in the back half of 2022.

Given this backdrop, investors might want to hunt for new names for their portfolios as we head into 2022. Let’s utilize our Zacks ‘First Profit’ screen to find strong stocks that might be worth buying…

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 three of the over 50 stocks that made it through this week's screen…

Delta Air Lines (DAL - Free Report) is the global airline powerhouse headquartered in Atlanta. Prior to the pandemic, Delta offered more than 5,000 daily departures. Delta serves nearly 200 million people every year and it boasts it takes “customers across its industry-leading global network to more than 300 destinations in over 50 countries.”

Delta has been negatively impacted by covid alongside the broader airline industry. But despite a wave of recent flight cancellations and delays, Delta’s outlook remains strong.

Hyatt Hotels (H - Free Report) is a leading global hospitality company. Hyatt’s portfolio currently includes roughly 1,000 hotel and all-inclusive properties in nearly 70 countries across six continents. Hyatt, like Delta and many others in the travel space, took a big covid hit.

Luckily, Hyatt is posting strong growth again and its revenue is projected to climb above its pre-covid levels next year.

Expedia Group (EXPE - Free Report) provides industry-leading technology solutions for the broader travel, leisure, and hospitality space. Expedia’s ecosystem of brands includes its namesake offerings, as well Hotels.com, Vrbo, Orbitz, and many others.

Expedia shares are up nearly 40% in 2021 and its growth outlook is impressive as people start vacationing again. In fact, Expedia is projected to post 66% revenue growth in 2021 and another 36% in 2022 to see it get very close to its pre-pandemic levels.  

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/.


In-Depth Zacks Research for the Tickers Above


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Delta Air Lines, Inc. (DAL) - free report >>

Hyatt Hotels Corporation (H) - free report >>

Expedia Group, Inc. (EXPE) - free report >>