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3 Top-Ranked Stocks to Buy for Solid Earnings Acceleration
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Studies have shown that a majority of successful stocks had seen an acceleration in earnings before an uptick in the stock price. In case of earnings growth, you pay for something already reflected in the stock price. But earnings acceleration helps spot stocks that haven’t caught the attention of investors yet, which once secured will invariably lead to a rally in the share price. This is because earnings acceleration considers both the direction and magnitude of growth rates.
Earnings acceleration, by the way, is the incremental growth in a company’s earnings per share (EPS). In other words, if the rate of a company’s quarter-over-quarter earnings growth increases within a stipulated frame of time, it can be called earnings acceleration.
An increasing percentage of earnings growth means that the company is fundamentally sound and has been on the right track for a considerable period of time. Meanwhile, a sideways percentage of earnings growth indicates a period of consolidation or slowdown, while a decelerating percentage of earnings growth may at times drag prices down.
Screening Parameters
Let’s look at stocks for which the last two quarter-over-quarter percentage EPS growth rates exceed the growth rates of the previous periods. The projected quarter-over-quarter percentage EPS growth rates are also expected to be higher than the previous periods’ growth rates.
EPS % Projected Growth (Q1)/(Q0) greater than EPS % Growth (Q0)/(Q-1): The projected growth rate for the current quarter (Q1) over the completed quarter (Q0) has to be greater than the growth rate from the completed quarter (Q0) over one quarter ago (Q-1).
EPS % Growth (Q0)/(Q-1) greater than EPS % Growth (Q-1)/(Q-2): The growth rate for the completed quarter (Q0) over one quarter ago (Q-1) has to be greater than the growth rate from one quarter ago (Q-1) over two quarters ago (Q-2).
EPS % Growth (Q-1)/(Q-2) greater than EPS % Growth (Q-2)/(Q-3): The growth rate from one quarter ago (Q-1) over two quarters ago (Q-2) has to be greater than the growth rate from two quarters ago (Q-2) over three quarters ago (Q-3).
In addition to this, we have added the following parameters:
Current Price greater than or equal to $5: This screens out low-priced stocks.
Average 20-day volume greater than or equal to 50,000: High trading volume implies that the stocks have adequate liquidity.
The above criteria narrowed down the universe of around 7,735 stocks to only three. Here are the stocks:
Dave & Buster's Entertainment (PLAY - Free Report) is a leading owner and operator of high-volume venues in North America that combine dining and entertainment for both adults and families. Under the Eat concept, Dave & Buster's offers a wide variety of starters, burgers, choice-grade steaks and health-conscious food.
Dave & Buster's expected earnings growth rate for the current year is 147.7%. The Zacks Consensus Estimate for Dave & Buster's current-year earnings has moved up 0.5% over the past 60 days. The company currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sensus Healthcare (SRTS - Free Report) is a medical device company. Sensus Healthcare specializes in treating non-melanoma skin cancers and other skin conditions, such as keloids, with superficial radiation therapy.
Sensus Healthcare's expected earnings growth rate for the current year is 95.2%. The Zacks Consensus Estimate for Sensus Healthcare's current-year earnings has moved up 75% over the past 60 days. The company currently has a Zacks Rank #1.
Sociedad Quimica y Minera (SQM - Free Report) produces fertilizer and iodine and manufactures industrial chemicals and iodine derivative products. Sociedad Quimica y Minera sells its products in over 60 countries.
Sociedad Quimica y Minera's expected earnings growth rate for the current year is 88.9%. The Zacks Consensus Estimate for Sociedad Quimica y Minera's current-year earnings has moved up 18.1% over the past 60 days. The company currently has a Zacks Rank #1.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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.
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3 Top-Ranked Stocks to Buy for Solid Earnings Acceleration
Studies have shown that a majority of successful stocks had seen an acceleration in earnings before an uptick in the stock price. In case of earnings growth, you pay for something already reflected in the stock price. But earnings acceleration helps spot stocks that haven’t caught the attention of investors yet, which once secured will invariably lead to a rally in the share price. This is because earnings acceleration considers both the direction and magnitude of growth rates.
Earnings acceleration, by the way, is the incremental growth in a company’s earnings per share (EPS). In other words, if the rate of a company’s quarter-over-quarter earnings growth increases within a stipulated frame of time, it can be called earnings acceleration.
An increasing percentage of earnings growth means that the company is fundamentally sound and has been on the right track for a considerable period of time. Meanwhile, a sideways percentage of earnings growth indicates a period of consolidation or slowdown, while a decelerating percentage of earnings growth may at times drag prices down.
Screening Parameters
Let’s look at stocks for which the last two quarter-over-quarter percentage EPS growth rates exceed the growth rates of the previous periods. The projected quarter-over-quarter percentage EPS growth rates are also expected to be higher than the previous periods’ growth rates.
EPS % Projected Growth (Q1)/(Q0) greater than EPS % Growth (Q0)/(Q-1): The projected growth rate for the current quarter (Q1) over the completed quarter (Q0) has to be greater than the growth rate from the completed quarter (Q0) over one quarter ago (Q-1).
EPS % Growth (Q0)/(Q-1) greater than EPS % Growth (Q-1)/(Q-2): The growth rate for the completed quarter (Q0) over one quarter ago (Q-1) has to be greater than the growth rate from one quarter ago (Q-1) over two quarters ago (Q-2).
EPS % Growth (Q-1)/(Q-2) greater than EPS % Growth (Q-2)/(Q-3): The growth rate from one quarter ago (Q-1) over two quarters ago (Q-2) has to be greater than the growth rate from two quarters ago (Q-2) over three quarters ago (Q-3).
In addition to this, we have added the following parameters:
Current Price greater than or equal to $5: This screens out low-priced stocks.
Average 20-day volume greater than or equal to 50,000: High trading volume implies that the stocks have adequate liquidity.
The above criteria narrowed down the universe of around 7,735 stocks to only three. Here are the stocks:
Dave & Buster's Entertainment (PLAY - Free Report) is a leading owner and operator of high-volume venues in North America that combine dining and entertainment for both adults and families. Under the Eat concept, Dave & Buster's offers a wide variety of starters, burgers, choice-grade steaks and health-conscious food.
Dave & Buster's expected earnings growth rate for the current year is 147.7%. The Zacks Consensus Estimate for Dave & Buster's current-year earnings has moved up 0.5% over the past 60 days. The company currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sensus Healthcare (SRTS - Free Report) is a medical device company. Sensus Healthcare specializes in treating non-melanoma skin cancers and other skin conditions, such as keloids, with superficial radiation therapy.
Sensus Healthcare's expected earnings growth rate for the current year is 95.2%. The Zacks Consensus Estimate for Sensus Healthcare's current-year earnings has moved up 75% over the past 60 days. The company currently has a Zacks Rank #1.
Sociedad Quimica y Minera (SQM - Free Report) produces fertilizer and iodine and manufactures industrial chemicals and iodine derivative products. Sociedad Quimica y Minera sells its products in over 60 countries.
Sociedad Quimica y Minera's expected earnings growth rate for the current year is 88.9%. The Zacks Consensus Estimate for Sociedad Quimica y Minera's current-year earnings has moved up 18.1% over the past 60 days. The company currently has a Zacks Rank #1.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
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