As the Aggressive Growth Stock Strategist at Zacks Investment Research I am charged with finding stocks that just what growth investors are looking for. A critical component of a growth stock is sequential revenue growth, which implies that seasonality and or cyclicality has not yet caught up to these stocks.
I have a screen that looks for stocks that are seeing sequential revenue growth over the last three quarters. I think run that group of stocks against the Zacks Rank, which will give me the stocks that are seeing increasing earnings estimates. This is just what aggressive growth investors want, revenue growth and higher earnings estimates which implies that the growth is making an impact on the bottom line.
This week there were 7 stocks that made the list, so lets review 5 of them in no particular order
3 of the 7 stocks are from the healthcare sector. There is one stock from the drug industry, medical care and medical products.
First is Neogenomics (NEO - Snapshot Report) which is a Zacks Rank #1 (Strong Buy) and carries a growth style score of B. The company specializes in cancer genetics diagnostic testing. There was a dramatic jump in revenue in the most recent quarter as the company posted sales of $60M, up from $27M in the previous quarter and $25M in the quarter before that. The big increase in sales also helped produce a bottom line beat.
Next is AMN Healthcare Services (AHS - Snapshot Report) which is also a Zacks Rank #1 (Strong Buy) and also has a growth style score of B. The company is s travel healthcare staffing company placing nurses and physicians in hospitals. Along with sequential revenue growth, AHS has been topping the Zacks Consensus Estimate for revenue. The company has topped the mark in each of the last 8 quarters.
The medical products stock is Glaukos (GKOS - Snapshot Report) and it is a Zacks Rank #2 (Buy) with a growth style score of B. The company makes medical devices for the treatment of glaucoma. The company is coming off a super solid quarter where they posted revenue of $23M and EPS of $0.03. The Zacks Consensus Estimate was calling for $19M and a loss of $0.16, and the market loved the beat and sent the stock higher by more than 25% in the session following the release.
There were two tech names and two financials on the list. I am going to highlight the financials because finding sequential growth in that space is a good deal more difficult than finding it in tech.
National Commerce (NCOM - Snapshot Report) is a Zacks Rank #2 (Buy) with a growth style score of F. That is not a typo, it is really an F which makes me really want to dig deeper into this stock. This bank holding company operates primarily in the south, so as an Ohio State Buckeye fan I am a little cautious on this name. I see operations throughout Alabama and some in Florida too, so it is no surprise the revenue for NCOM over the last two quarters was $17M and $20M. Importantly, each quarter was a positive revenue surprise of approximately $2M (or a safety).
NMI Holdings (NMIH - Snapshot Report) is a Zacks Rank #1 (Strong Buy) with a growth style score of C. One think that struck me on the quote page was the forward PE multiple this stock carries, 273x. Maybe not so surprising is that this stock has a value style score of F. The company provides mortgage insurance. The most recent quarter was better than expected, with the company beating on top and posting a smaller than expected loss. Wall Street liked what it heard and the stock moved higher by more than 15% in the session following the release.
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Brian Bolan is a Stock Strategist
Stocks Under $10 Investor service where he looks for low
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