For Immediate Release
Chicago, IL – March 18, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Asbury Automotive Group Inc. (
ABG Quick Quote ABG - Free Report) , Arcos Dorados Holdings Inc. ( ARCO Quick Quote ARCO - Free Report) , Fluor Corp. ( FLR Quick Quote FLR - Free Report) , and Cushman & Wakefield ( CWK Quick Quote CWK - Free Report) . Here are highlights from Thursday’s Analyst Blog: These 4 Growth Stocks Are Ripe for the Picking
Growth stocks are riskier. You have to pay up today on the chance that it will pay off later. Okay, all investing is a bit like that, but it's
more like that for growth stocks.
And why is this so?
It's because the same increase from a smaller base is a bigger percentage increase. For example, 2/10 is 20% while 2/100 is 2%. Conversely, the larger the revenue or earnings base you're using, the harder it is to generate substantial growth rates. This is the law of large numbers.
So in general, it is the smaller companies that generate higher growth rates. Which means that it pays to get in as early as possible. And this could be when the company is still playing with an idea rather than making real money. It could still be young; it could lack experience; and it could be fighting to survive.
So balancing the risk with reward potential is what we need to do.
Over the past couple of decades, tech companies have demonstrated that not all growth comes from new companies. They've also shown that growth can come off growth -- in some pretty unbelievable ways. But because of the unprecedented rollout of digital infrastructure over the past couple of years, we should be looking at less heat this year.
That doesn't, of course, mean that all tech is bad, or not worth investing in. Tech, by and large, is what we
must be invested in. But in this market, where negative news flow has become the norm and uncertainties and fears are looming large (including the fear of a possible recession), there may be an opportunity to invest in sectors other than tech. And still ride the growth wave.
The Zacks Style Score system provides grades for value, growth and momentum potential of each stock. So if we're looking for growth stocks, we could benefit immensely from checking out the Growth Score of a stock. Combining this with the Zacks Rank, which also captures recent estimate revisions (among other things), gives us a fairly good idea of the kind of areas we should be investing in.
If we refine our search further to consider only those stocks that have positive revenue growth rates, we will further increase our chances of picking winners. This is because it is normal for a company in the growth phase to invest heavily in its future growth.
This can have a negative impact on its earnings. But the result of all this investment is seen from its ability to grow revenue. So a stock that is growing revenue is what we want to bet on.
And finally, don't forget to check the valuation. Even though we've had a terrible start to the year and some stocks have lost 30%, 50% or even 70% of their value, we can't take it for granted that the one we set our hearts on has had a similar fate. So this too needs to be checked out.
Following is a list of companies that are displaying strong growth characteristics while retaining a reasonable or low valuation-
Asbury Automotive Group Inc.
As one of the largest automotive retailers in the U.S., Asbury Automotive offers customers new and used vehicles and related financing and insurance, vehicle maintenance and repair services, replacement parts and service contracts. Used vehicles are also auctioned to other dealers.
Asbury shares carry a Zacks Rank #1 (Strong Buy), a Growth Score A and a VGM Score A, which means that on the face of things, it is a good investment. Its estimated revenue growth of 68% in 2022 remains in positive territory. The company is also expected to grow earnings by 25.1% this year.
The estimate revisions trend is impressive. Zacks Consensus Estimate for 2022 has increased $4.30, or 14.4% in the last 30 days while the estimate for 2023 increased by $3.88, or 14%.
A price-to-sales ratio that is under 1 indicates that the shares are trading at a discount to its sales potential while a price-to-earnings growth ratio of less than 1 is indicative of undervaluation of a company's earnings. In Asbury's case, the P/S ratio is 0.44 while the PEG ratio is 0.29.
So the shares are clearly worth buying.
Arcos Dorados Holdings Inc.
Arcos Dorados is a McDonald's franchisee with the exclusive right to own, operate and grant franchises of McDonald's restaurants in 20 countries and territories in Latin America and the Caribbean.
Arcos carries a Zacks Rank #2 (Buy), a Growth Score A and a VGM Score A.
Analysts currently expect its revenue to grow 35.0% in 2022 and 9.2% in 2023. Its earnings are expected to grow 120.8% in 2022 and 148.9% in 2023.
And this follows a 6 cent (66.7%) increase in its 2022 earnings estimate for 2022 and a 5 cent (15.6%) increase in its earnings estimate for 2023 in the last 30 days.
All of this is available at an attractive valuation (P/S of 0.62 and PEG of 0.80).
Fluor provides engineering, procurement, construction and maintenance services (EPCM) through a number of subsidiaries. It also provides operations and maintenance services to major industrial clients. Starting from first-quarter 2021, Fluor operates through four business segments: Energy Solutions, Urban Solutions, Mission Solutions and Other with customers across a broad range of industries including chemicals, energy, construction, mining, life sciences, staffing services and government.
With a Zacks Rank #1, Growth Score A and VGM Score A, Fluor is an attractive stock.
Analysts expect Fluor to generate revenue and earnings growth of 10% and 42.6% this year and another 7% and 33.6% in 2023.
So they've taken their 2022 earnings estimate up 22 cents (19.6%) in last 30 days and the 2023 earnings estimate up 3 cents (1.7%) during the same time period.
What's more, the valuation looks cheap at 0.32X sales and PEG of 0.62.
Cushman & Wakefield
Cushman & Wakefield plc is a real estate services firm. It acquires and develops commercial properties and property leasing, facilities management, tenant representation and valuation services.
Cushman & Wakefield is another solid growth stock, going by its Zacks #1 rank, Growth Score of A and VGM Score of A.
Analysts are betting that the company will generate revenue growth of 8.2% in 2022 and 5.8% in 2023 and earnings growth 18.6% in 2022 and 6.6% in 2023. They've raised their 2022 earnings estimates by 35 cents (16.9%) in the last 30 days and their 2023 earnings estimate by 28 cents (12.2%).
The P/S ratio of 0.48 and PEG ratio of 0.83 are other inducements to buy.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared
+40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation. See Stocks Free >>
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss
. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.