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5 Stocks With Solid Sales Growth to Counter Bearish Markets
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Given the extremely volatile markets, it has become increasingly difficult for investors to select stocks and generate robust returns. Markets are currently bearing the brunt of the ongoing Russia-Ukraine conflict, unprecedented inflation numbers and recessionary fears.
Amid such bearish sentiments, a conventional stock picking strategy is useful. One such method is selecting stocks with steady sales growth. In this regard, stocks like Sanderson Farms, Inc. , United States Steel Corp. (X - Free Report) , Century Communities, Inc. (CCS - Free Report) , Qualcomm Incorporated (QCOM - Free Report) and Cenovus Energy Inc. (CVE - Free Report) are worth investing in.
Sales growth is a vital metric for any company, as it is an important 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 run a business. Low revenues lead to unprofitable business and unimpressive financial results. Stagnant companies may generate near-term profit, but companies need to show accelerated growth to attract new investors.
The lack of sales growth most likely indicates that the company is not gaining market share compared with its peers. In simple terms, some sustained sales growth is required to support profitability.
Focusing exclusively on sales growth is not enough, though. A healthy sales growth rate is certainly a positive indicator for picking good stocks, but it does not ensure profits. So, considering 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. Furthermore, a sufficient cash position indicates that revenues are being channelized in the right direction.
Picking the Winning Stocks
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 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 18 stocks that qualified the screening:
Mississippi-based Sanderson Farms is a poultry processing company that produces, processes, markets and distributes fresh and frozen chicken products. Also, SAFM sells ice packs, chill packs, bulk packs and frozen chicken, in whole, cut-up and boneless form, primarily under the Sanderson Farms brand.
Sanderson Farms’ expected sales growth rate for fiscal 2022 is 30.1%. The stock currently sports a Zacks Rank #1.
Pittsburgh, PA-based United States Steel is a leading steel manufacturer in the United States and the fifth-largest in the world. X produces and sells steel mill products – including flat-rolled and tubular products – in North America and Europe.
United States Steel’s sales are expected to increase 5.9% for 2022. The stock sports a Zacks Rank #1 at present.
Based in Greenwood Village, CO, Century Communities is engaged in the design, development, construction, marketing and sale of single-family attached and detached homes. CCS is also involved in the entitlement and development of the underlying land and provision of mortgage, title and insurance services to its home buyers.
Century Communities’ expected sales growth for 2022 is 10.8%. The company, at present, carries a Zacks Rank #2.
Qualcomm, headquartered in San Diego, CA, designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access (CDMA) technology. QCOM operates through its two business segments: Qualcomm CDMA Technologies and Qualcomm Technology Licensing.
Qualcomm’s expected sales growth rate for fiscal 2022 is 33.3%. The stock carries a Zacks Rank #2 at present.
Calgary, AB-based Cenovus Energy is a leading integrated energy firm. Starting from pumping out oil from its oil sands projects in Canada, CVE’s operations comprise marketing the produced oil, natural gas and natural gas liquid.
Cenovus Energy’s expected sales growth rate for 2022 is 32.4%. The stock sports a Zacks Rank #1 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 Counter Bearish Markets
Given the extremely volatile markets, it has become increasingly difficult for investors to select stocks and generate robust returns. Markets are currently bearing the brunt of the ongoing Russia-Ukraine conflict, unprecedented inflation numbers and recessionary fears.
Amid such bearish sentiments, a conventional stock picking strategy is useful. One such method is selecting stocks with steady sales growth. In this regard, stocks like Sanderson Farms, Inc. , United States Steel Corp. (X - Free Report) , Century Communities, Inc. (CCS - Free Report) , Qualcomm Incorporated (QCOM - Free Report) and Cenovus Energy Inc. (CVE - Free Report) are worth investing in.
Sales growth is a vital metric for any company, as it is an important 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 run a business. Low revenues lead to unprofitable business and unimpressive financial results. Stagnant companies may generate near-term profit, but companies need to show accelerated growth to attract new investors.
The lack of sales growth most likely indicates that the company is not gaining market share compared with its peers. In simple terms, some sustained sales growth is required to support profitability.
Focusing exclusively on sales growth is not enough, though. A healthy sales growth rate is certainly a positive indicator for picking good stocks, but it does not ensure profits. So, considering 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. Furthermore, a sufficient cash position indicates that revenues are being channelized in the right direction.
Picking the Winning Stocks
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 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 18 stocks that qualified the screening:
Mississippi-based Sanderson Farms is a poultry processing company that produces, processes, markets and distributes fresh and frozen chicken products. Also, SAFM sells ice packs, chill packs, bulk packs and frozen chicken, in whole, cut-up and boneless form, primarily under the Sanderson Farms brand.
Sanderson Farms’ expected sales growth rate for fiscal 2022 is 30.1%. The stock currently sports a Zacks Rank #1.
Pittsburgh, PA-based United States Steel is a leading steel manufacturer in the United States and the fifth-largest in the world. X produces and sells steel mill products – including flat-rolled and tubular products – in North America and Europe.
United States Steel’s sales are expected to increase 5.9% for 2022. The stock sports a Zacks Rank #1 at present.
Based in Greenwood Village, CO, Century Communities is engaged in the design, development, construction, marketing and sale of single-family attached and detached homes. CCS is also involved in the entitlement and development of the underlying land and provision of mortgage, title and insurance services to its home buyers.
Century Communities’ expected sales growth for 2022 is 10.8%. The company, at present, carries a Zacks Rank #2.
Qualcomm, headquartered in San Diego, CA, designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access (CDMA) technology. QCOM operates through its two business segments: Qualcomm CDMA Technologies and Qualcomm Technology Licensing.
Qualcomm’s expected sales growth rate for fiscal 2022 is 33.3%. The stock carries a Zacks Rank #2 at present.
Calgary, AB-based Cenovus Energy is a leading integrated energy firm. Starting from pumping out oil from its oil sands projects in Canada, CVE’s operations comprise marketing the produced oil, natural gas and natural gas liquid.
Cenovus Energy’s expected sales growth rate for 2022 is 32.4%. The stock sports a Zacks Rank #1 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