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Find Great Stocks to Buy Amid Turmoil Using this 'First Profit' Screen
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Stocks attempted to recoup some of their recent losses on Tuesday, with the market showing signs of reliance amid the ongoing Russian invasion. Despite the bounce back, the S&P 500 remains near correction territory and the Nasdaq sits right on the cusp of a bear market, down roughly 20% from its November peaks.
The lack of progress on the cease-fire front is causing Wall Street to grow increasingly nervous about the situation in Ukraine. The U.S., other nations, and private companies continue to tighten their economic sanctions on Russia, Putin, and his regime.
European leaders are reportedly headed to Kyiv to meet with Ukraine President Volodymyr Zelensky. Still, projecting what might happen next grows more difficult by the day, and the possibility of a larger or prolonged conflict could start to spook the markets. Thankfully, some of the Fed-related uncertainty should be over this week, with the FOMC meeting underway.
In the face of these fears and unknowns, Wall Street will likely continue to buy stocks in an attempt to beat 40-year high inflation. And even if the Fed were to surprise Wall Street and raise rates even higher in 2022, they are poised to remain historically low.
Given this backdrop, investors might want to hunt for stocks to buy as we near the end of the first quarter of 2022. Let’s utilize our Zacks ‘First Profit’ screen to help find strong stocks …
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 two of the 35 stocks that made it through this week's screen…
Datadog, Inc. (DDOG - Free Report) is a monitoring and security platform focused on cloud applications. DDOG’s SaaS offerings help integrate and automate infrastructure monitoring, application performance monitoring and log management to provide what it calls a “unified, real-time observability of our customers' entire technology stack.”
Datadog’s revenue climbed 70% in 2021 to $1.03 billion and Zacks estimates call for another 48% top-line expansion in 2022 and 37% higher sales in 2023 to reach $2.1 billion. And its strong fourth quarter helped it report GAAP earnings of $0.02 a share. Datadog shares have surged 230% since going public in 2019. Wall Street also remains high on DDOG, which lands a Zacks Rank #3 (Hold) at the moment.
Pure Storage (PSTG - Free Report) aims to deliver the most advanced data storage technology and services, by offering a “storage as-a-service model seamlessly across multiple clouds.” Pure Storage has expanded its customer base within the business world by helping its clients put their data to use while also reducing the complexity and expense of managing the infrastructure.
Pure Storage topped our fourth quarter fiscal 2022 earnings and revenue estimates on March 2. Analysts raced to up their adjusted earnings estimates for FY23 and FY24 following its impressive quarter. The data storage company’s shares soared following its release and PSTG stock is now up 240% in the last two years.
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.
Image: Bigstock
Find Great Stocks to Buy Amid Turmoil Using this 'First Profit' Screen
Stocks attempted to recoup some of their recent losses on Tuesday, with the market showing signs of reliance amid the ongoing Russian invasion. Despite the bounce back, the S&P 500 remains near correction territory and the Nasdaq sits right on the cusp of a bear market, down roughly 20% from its November peaks.
The lack of progress on the cease-fire front is causing Wall Street to grow increasingly nervous about the situation in Ukraine. The U.S., other nations, and private companies continue to tighten their economic sanctions on Russia, Putin, and his regime.
European leaders are reportedly headed to Kyiv to meet with Ukraine President Volodymyr Zelensky. Still, projecting what might happen next grows more difficult by the day, and the possibility of a larger or prolonged conflict could start to spook the markets. Thankfully, some of the Fed-related uncertainty should be over this week, with the FOMC meeting underway.
In the face of these fears and unknowns, Wall Street will likely continue to buy stocks in an attempt to beat 40-year high inflation. And even if the Fed were to surprise Wall Street and raise rates even higher in 2022, they are poised to remain historically low.
Given this backdrop, investors might want to hunt for stocks to buy as we near the end of the first quarter of 2022. Let’s utilize our Zacks ‘First Profit’ screen to help find strong stocks …
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 two of the 35 stocks that made it through this week's screen…
Datadog, Inc. (DDOG - Free Report)
Datadog, Inc. (DDOG - Free Report) is a monitoring and security platform focused on cloud applications. DDOG’s SaaS offerings help integrate and automate infrastructure monitoring, application performance monitoring and log management to provide what it calls a “unified, real-time observability of our customers' entire technology stack.”
Datadog’s revenue climbed 70% in 2021 to $1.03 billion and Zacks estimates call for another 48% top-line expansion in 2022 and 37% higher sales in 2023 to reach $2.1 billion. And its strong fourth quarter helped it report GAAP earnings of $0.02 a share. Datadog shares have surged 230% since going public in 2019. Wall Street also remains high on DDOG, which lands a Zacks Rank #3 (Hold) at the moment.
Pure Storage (PSTG - Free Report)
Pure Storage (PSTG - Free Report) aims to deliver the most advanced data storage technology and services, by offering a “storage as-a-service model seamlessly across multiple clouds.” Pure Storage has expanded its customer base within the business world by helping its clients put their data to use while also reducing the complexity and expense of managing the infrastructure.
Pure Storage topped our fourth quarter fiscal 2022 earnings and revenue estimates on March 2. Analysts raced to up their adjusted earnings estimates for FY23 and FY24 following its impressive quarter. The data storage company’s shares soared following its release and PSTG stock is now up 240% in the last two years.
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/.