As the U.S. bull market is turning six years of age, growth investing is gaining huge popularity. Because growth investing is basically a momentum play, it is a great strategy in a trending market (a market characterized by a prolonged uptrend). Naturally, when the broader market sentiments have a predetermined positive direction, there is hardly any strategy as gainful as growth investing.
Growth stocks refer to those high quality stocks that are likely to witness revenues and earnings increase at a faster rate than the industry average. These stocks harness their momentum in earnings to create a positive bias in the market, resulting in rocketing share prices. With the U.S. economy growing at a faster clip not seen in over a decade, the stock market is set to surge again this year defying weak international trends. This would result in outsized returns for growth stocks.
While it is quite difficult to identify companies with strong business growth prospects, our Zacks stock screener makes this process simpler. First, we have selected those stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy). Then we narrowed down the list by picking companies that have estimated earnings growth of over 500% for 2015.
Below are three stocks that have incredible earnings growth and solid fundamentals. Stuffing these stocks into one’s portfolio can thus lead to huge gains.
China Southern Airlines Co. Ltd. (ZNH - Free Report)
Based in Guangzhou, China Southern Airlines provides air transportation services in the People’s Republic of China, Hong Kong, Macau, Taiwan and internationally. It operates the largest fleet, most developed route network and largest passenger capacity of any airline in The People's Republic of China.
The stock has seen solid earnings estimate revisions from $2.86 to $4.09 per share for 2015 over the past 60 days. This represents a massive year-over-year increase of 529.23%. Revenues are also expected to grow 9.8% versus the industry average of 4.3%.
The stock delivered strong returns of 21% last year. It currently has a Zacks Rank #1 and an excellent Zacks Industry Rank in the top 3%, suggesting incredible growth this year (see more: China Southern Airlines Shares March Higher, Can It Continue?).
Pacira Pharmaceuticals Inc. (PCRX - Free Report)
Based in Parsippany, NJ, Pacira Pharmaceuticals is a specialty pharmaceutical company focusing on the development, commercialization and manufacture of new pharmaceutical products for use in hospitals and ambulatory surgery centers worldwide. It develops pharmaceutical products based on its proprietary DepoFoam drug delivery technology.
The company has seen estimates rising by 44 cents to $2.23 per share for 2015 over the past 30 days. The 2015 Zacks Consensus Estimate represents an increase of 786.17% for earnings and 66.4% for revenues from the prior year. The stock returned nearly 57% last year and the outperformance will likely continue this year. It has a Zacks Rank #2 and a solid Zacks Industry Rank in the top 32%, suggesting that Pacira Pharmaceuticals is primed for more growth this year.
Based in Evansville, IN, Accuride is one of the largest and most diversified manufacturers and suppliers of commercial vehicle components in North America. The company's products include steel and aluminum commercial vehicle wheels, wheel-end components and assemblies, truck body and chassis parts, seating assemblies and other commercial vehicle components. The most recognized brand names are Accuride Wheel End Solutions (Accuride Wheels and Gunite) and Brillion Iron Works.
The company has seen upward earnings estimate revision of 3 cents for the current year over the past 90 days. The 2015 Zacks Consensus Estimate is pegged at 31 cents per share, suggesting whopping growth from one cent expected for 2014. Revenues are also likely to grow 5.6% year over year versus the industry average of 0.2%.
The stock has risen about 14.8% last year and has a Zacks Rank of #2. It also has a solid Zacks Industry Rank in the top 41%. All these underscore a solid future growth story for Accuride (see more: Surging Earnings Estimates Signal Good News for Accuride).
The above-mentioned stocks seem to be a perfect investment in a booming stock market and create additional wealth in the portfolio.