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Buy These 5 Stocks With Sales Growth for Robust Returns Now
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Sales growth is an important metric for any company, as it is an essential part of growth projections and instrumental in strategic decision making. By observing this key metric over a period of time, one can clearly understand a company’s growth trend.
Sales growth is crucial to justify the fixed and variable expenses incurred to operate a business. Lower revenues lead to an unprofitable business and disappointing financial performance. While stagnant companies may generate near-term profit, they need to show accelerated growth to attract new investors.
In an improving economy, a lack of sales growth most likely reflects that the company is not gaining market share over its competitors. In simple terms, some sustained sales growth is required to maintain profitability.
However, focusing exclusively on sales growth is not enough. A healthy sales growth rate is certainly a positive indicator for picking good stocks, but it does not ensure profits. So, taking into consideration a company’s cash position along with its sales number can prove to be a more dependable strategy.
A strong liquidity position and steady cash flow give a company more flexibility with respect to business decisions and potential investments. Cash also enables a company to endure market downturns. Further, a sufficient cash position indicates that revenues are being channelized in the right direction.
Selecting the Winning Stocks
In order to shortlist stocks with impressive sales growth and a high cash balance, we have selected 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow more than $500 million as our main screening parameters.
But sales growth and cash strength are not the absolute criteria for selecting stocks. Hence, we have added certain other factors to arrive at a winning strategy.
P/S Ratio less than X-Industry: This metric determines the value placed on each dollar of a company’s revenues. The lower the ratio, the better it is for picking a stock since the investor is paying less for each unit of sales.
% Change F1 Sales Estimate Revisions (four weeks) greater than X-Industry: Estimate revisions, better than the industry, are often seen to trigger an increase in stock price.
Operating Margin (average last five years) greater than 5%: Operating margin measures how much every dollar of a company's sales translates into profits. A high ratio indicates that the company has good cost control and sales are increasing faster than costs — an optimal situation.
Return on Equity (ROE) greater than 5%: This metric will ensure that sales growth is translated into profits and the company is not hoarding cash. A high ROE means that the company is spending wisely and is in all likelihood profitable.
Here are five of the 21 stocks that qualified the screening:
Crocs is one of the leading footwear brands focusing on comfort and style. CROX, based in Broomfield, CO, offers a wide variety of footwear products, including sandals, wedges, flips and slides that cater to people of all ages.
Crocs’ expected sales growth rate for 2022 is 48.6%. The stock currently sports a Zacks Rank #1.
Headquartered in New York, Tapestry is the designer and marketer of fine accessories and gifts for women and men globally. TPR offers lifestyle products, including handbags, women’s and men’s accessories, footwear, jewelry, seasonal apparel collections, sunwear, travel bags, fragrance and watches.
Tapestry’s expected sales growth rate for fiscal 2022 is 17.6%. It currently carries a Zacks Rank #2.
Based in Austin, TX, Tesla is the market leader in battery-powered electric car sales in the United States, with roughly 70% market share. TSLA operates under two segments: Automotive and Energy Generation & Storage.
Tesla’s sales are expected to jump 51.4% for 2022. The stock sports a Zacks Rank #1 at present.
Cincinnati Financial, headquarters in Fairfield, OH, markets property and casualty insurance. CINF owns three subsidiaries: The Cincinnati Insurance Company, CSU Producer Resources Inc. and CFC Investment Company.
Cincinnati Financial’s expected sales growth rate for 2022 is 7.7%. The stock sports a Zacks Rank #1 at present.
Cboe Global, based in Chicago, IL, is one of the largest stock exchange operators by volume in the United States and a leading market globally for ETP trading. CBOE’s trading venues include the largest options exchange in the United States and the largest stock exchange by value traded in Europe.
Cboe Global’s expected sales growth rate for 2022 is 6.7%. The stock carries a Zacks Rank #2 currently.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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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Buy These 5 Stocks With Sales Growth for Robust Returns Now
Sales growth is an important metric for any company, as it is an essential part of growth projections and instrumental in strategic decision making. By observing this key metric over a period of time, one can clearly understand a company’s growth trend.
With regard to this, stocks like Crocs, Inc. (CROX - Free Report) , Tapestry, Inc. (TPR - Free Report) , Tesla, Inc. (TSLA - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and Cboe Global Markets (CBOE - Free Report) are worth betting on.
Sales growth is crucial to justify the fixed and variable expenses incurred to operate a business. Lower revenues lead to an unprofitable business and disappointing financial performance. While stagnant companies may generate near-term profit, they need to show accelerated growth to attract new investors.
In an improving economy, a lack of sales growth most likely reflects that the company is not gaining market share over its competitors. In simple terms, some sustained sales growth is required to maintain profitability.
However, focusing exclusively on sales growth is not enough. A healthy sales growth rate is certainly a positive indicator for picking good stocks, but it does not ensure profits. So, taking into consideration a company’s cash position along with its sales number can prove to be a more dependable strategy.
A strong liquidity position and steady cash flow give a company more flexibility with respect to business decisions and potential investments. Cash also enables a company to endure market downturns. Further, a sufficient cash position indicates that revenues are being channelized in the right direction.
Selecting the Winning Stocks
In order to shortlist stocks with impressive sales growth and a high cash balance, we have selected 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow more than $500 million as our main screening parameters.
But sales growth and cash strength are not the absolute criteria for selecting stocks. Hence, we have added certain other factors to arrive at a winning strategy.
P/S Ratio less than X-Industry: This metric determines the value placed on each dollar of a company’s revenues. The lower the ratio, the better it is for picking a stock since the investor is paying less for each unit of sales.
% Change F1 Sales Estimate Revisions (four weeks) greater than X-Industry: Estimate revisions, better than the industry, are often seen to trigger an increase in stock price.
Operating Margin (average last five years) greater than 5%: Operating margin measures how much every dollar of a company's sales translates into profits. A high ratio indicates that the company has good cost control and sales are increasing faster than costs — an optimal situation.
Return on Equity (ROE) greater than 5%: This metric will ensure that sales growth is translated into profits and the company is not hoarding cash. A high ROE means that the company is spending wisely and is in all likelihood profitable.
Zacks Rank less than or equal to 2: Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform, irrespective of the market environment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are five of the 21 stocks that qualified the screening:
Crocs is one of the leading footwear brands focusing on comfort and style. CROX, based in Broomfield, CO, offers a wide variety of footwear products, including sandals, wedges, flips and slides that cater to people of all ages.
Crocs’ expected sales growth rate for 2022 is 48.6%. The stock currently sports a Zacks Rank #1.
Headquartered in New York, Tapestry is the designer and marketer of fine accessories and gifts for women and men globally. TPR offers lifestyle products, including handbags, women’s and men’s accessories, footwear, jewelry, seasonal apparel collections, sunwear, travel bags, fragrance and watches.
Tapestry’s expected sales growth rate for fiscal 2022 is 17.6%. It currently carries a Zacks Rank #2.
Based in Austin, TX, Tesla is the market leader in battery-powered electric car sales in the United States, with roughly 70% market share. TSLA operates under two segments: Automotive and Energy Generation & Storage.
Tesla’s sales are expected to jump 51.4% for 2022. The stock sports a Zacks Rank #1 at present.
Cincinnati Financial, headquarters in Fairfield, OH, markets property and casualty insurance. CINF owns three subsidiaries: The Cincinnati Insurance Company, CSU Producer Resources Inc. and CFC Investment Company.
Cincinnati Financial’s expected sales growth rate for 2022 is 7.7%. The stock sports a Zacks Rank #1 at present.
Cboe Global, based in Chicago, IL, is one of the largest stock exchange operators by volume in the United States and a leading market globally for ETP trading. CBOE’s trading venues include the largest options exchange in the United States and the largest stock exchange by value traded in Europe.
Cboe Global’s expected sales growth rate for 2022 is 6.7%. The stock carries a Zacks Rank #2 currently.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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