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5 Stocks With Solid Sales Growth to Buy Amid Market Volatility
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Markets have been extremely volatile over the past several days over concerns regarding the Russia-Ukraine conflict. The conventional stock picking strategy is useful amid such a dismal scenario. One such method is selecting stocks with steady sales growth.
Sales growth is a key metric for any company, as it is an essential part of growth projections and is instrumental in strategic decision making. By observing this metric over a period of time, one can clearly understand a company’s growth trend.
With regard to this, stocks like Sanderson Farms, Inc. , Quidel Corporation (QDEL - Free Report) , Crown Holdings, Inc. (CCK - Free Report) , Everest Re Group, Ltd. and Eversource Energy (ES - Free Report) are worth betting on.
It’s worth keeping in mind that in cases when companies incur loss, although briefly, they are valued on their revenues, as top-line growth (or decline) is usually an indicator of a company’s future earnings performance.
A company can improve earnings by resorting to cost-control measures while maintaining stable revenues. It is to be noted that sustainable bottom-line growth invariably requires superior revenues.
Hence, the Price-to-Sales (P/S) ratio can turn out to be an appropriate metric for stock valuation. This metric’s importance further lies in the fact that management has limited opportunities to manipulate revenues unlike earnings.
While sales growth provides investors an insight into product demand and pricing power, it doesn’t indicate whether the company is operating efficiently. A huge sales number does not necessarily convert into profits.
Hence, consideration of a company’s cash position and sales number can be a more dependable strategy. Substantial cash in hand and a steady cash flow give a company more flexibility with respect to business decisions and investments.
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 28 stocks that qualified the screening:
Based in Mississippi, Sanderson Farms is a poultry processing company that produces, processes, markets, and distributes fresh and frozen chicken products. SAMF also sells ice pack, chill pack, bulk pack and frozen chicken, in whole, cut-up as well as boneless form, primarily under the Sanderson Farms brand name.
Sanderson Farms’ expected sales growth rate for fiscal 2022 is 18%. The stock currently sports a Zacks Rank #1.
San Diego, CA-based Quidel is a key player in the development, manufacturing and marketing of rapid diagnostic testing solutions. QDEL operates in a single business segment that develops, manufactures and markets its four product categories.
Quidel’s expected sales growth rate for 2022 is 17.7%. It currently sports a Zacks Rank #1.
Crown Holdings is a leading global manufacturer of packaging products for consumer goods. Philadelphia, PA-based CCK makes a wide variety of steel and aluminum cans for food, beverage, household, and other consumer products and metal vacuum closures, steel crowns and caps.
Crown Holdings’ sales are expected to grow 7.8% for 2022. The stock sports a Zacks Rank #1 at present.
Everest Re — headquartered in Hamilton, Bermuda — writes property and casualty, reinsurance and insurance in the U.S, Bermuda and international markets. RE also offers other innovative products like excess and surplus lines of insurance.
Everest Re’s expected sales growth rate for 2022 is 12.7%. The stock carries a Zacks Rank #2 at present.
Eversource Energy, earlier known as Northeast Utilities, is engaged in the energy delivery business. The Springfield, MA-based ES transmits and delivers electricity and natural gas to more than 3.7 million residential, commercial, and industrial customers in Connecticut, New Hampshire and Massachusetts.
Eversource Energy’s expected sales growth rate for 2022 is 6.2%. 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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5 Stocks With Solid Sales Growth to Buy Amid Market Volatility
Markets have been extremely volatile over the past several days over concerns regarding the Russia-Ukraine conflict. The conventional stock picking strategy is useful amid such a dismal scenario. One such method is selecting stocks with steady sales growth.
Sales growth is a key metric for any company, as it is an essential part of growth projections and is instrumental in strategic decision making. By observing this metric over a period of time, one can clearly understand a company’s growth trend.
With regard to this, stocks like Sanderson Farms, Inc. , Quidel Corporation (QDEL - Free Report) , Crown Holdings, Inc. (CCK - Free Report) , Everest Re Group, Ltd. and Eversource Energy (ES - Free Report) are worth betting on.
It’s worth keeping in mind that in cases when companies incur loss, although briefly, they are valued on their revenues, as top-line growth (or decline) is usually an indicator of a company’s future earnings performance.
A company can improve earnings by resorting to cost-control measures while maintaining stable revenues. It is to be noted that sustainable bottom-line growth invariably requires superior revenues.
Hence, the Price-to-Sales (P/S) ratio can turn out to be an appropriate metric for stock valuation. This metric’s importance further lies in the fact that management has limited opportunities to manipulate revenues unlike earnings.
While sales growth provides investors an insight into product demand and pricing power, it doesn’t indicate whether the company is operating efficiently. A huge sales number does not necessarily convert into profits.
Hence, consideration of a company’s cash position and sales number can be a more dependable strategy. Substantial cash in hand and a steady cash flow give a company more flexibility with respect to business decisions and investments.
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 28 stocks that qualified the screening:
Based in Mississippi, Sanderson Farms is a poultry processing company that produces, processes, markets, and distributes fresh and frozen chicken products. SAMF also sells ice pack, chill pack, bulk pack and frozen chicken, in whole, cut-up as well as boneless form, primarily under the Sanderson Farms brand name.
Sanderson Farms’ expected sales growth rate for fiscal 2022 is 18%. The stock currently sports a Zacks Rank #1.
San Diego, CA-based Quidel is a key player in the development, manufacturing and marketing of rapid diagnostic testing solutions. QDEL operates in a single business segment that develops, manufactures and markets its four product categories.
Quidel’s expected sales growth rate for 2022 is 17.7%. It currently sports a Zacks Rank #1.
Crown Holdings is a leading global manufacturer of packaging products for consumer goods. Philadelphia, PA-based CCK makes a wide variety of steel and aluminum cans for food, beverage, household, and other consumer products and metal vacuum closures, steel crowns and caps.
Crown Holdings’ sales are expected to grow 7.8% for 2022. The stock sports a Zacks Rank #1 at present.
Everest Re — headquartered in Hamilton, Bermuda — writes property and casualty, reinsurance and insurance in the U.S, Bermuda and international markets. RE also offers other innovative products like excess and surplus lines of insurance.
Everest Re’s expected sales growth rate for 2022 is 12.7%. The stock carries a Zacks Rank #2 at present.
Eversource Energy, earlier known as Northeast Utilities, is engaged in the energy delivery business. The Springfield, MA-based ES transmits and delivers electricity and natural gas to more than 3.7 million residential, commercial, and industrial customers in Connecticut, New Hampshire and Massachusetts.
Eversource Energy’s expected sales growth rate for 2022 is 6.2%. 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