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5 Stocks With Robust Sales Growth to Combat Recession Fears
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Concerns like the persistent disruptions in the global supply chain system, record-high inflation and the continuation of higher interest rate monetary policy globally are weighing on investor sentiments. These have led to an increase in recession risks in the next six-to-nine months.
Amid such concerns and market volatility, investors are cautious about entering the market. So, a conventional stock-picking strategy is the need of the hour for generating robust returns. One such method is picking stocks with steady sales growth. In this regard, stocks like Conagra Brands, Inc. (CAG - Free Report) , Cboe Global Markets, Inc. (CBOE - Free Report) , QuidelOrtho Corporation (QDEL - Free Report) , American Electric Power Company, Inc. (AEP - Free Report) and Clean Harbors, Inc. (CLH - Free Report) are worth considering.
While assessing any company, revenues are often more scrutinized than earnings. This is because investors want to make sure that a business has the capability of generating more sales over time to cater to an expanding customer base. Stable or declining sales growth indicates obstacles at the company. Stagnant companies may generate near-term profit but do not ensure enough growth to attract new investors.
Without solid revenue growth, bottom-line improvement may not be sustainable over the long term. While a company can show earnings strength by lowering costs, continuous bottom-line improvement usually requires robust sales growth.
Yet, sales growth alone doesn’t indicate much about a company’s prospects. So, taking into account a company’s cash position along with its sales number can prove to be a sensible investment strategy. Substantial cash in hand and a steady cash flow give a company more flexibility with respect to business decisions and potential investments.
Selecting the Potential 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 16 stocks that qualified the screening:
Conagra Brands, based in Chicago, is a leading branded food company in North America. Some iconic brands of CAG are Reddi-Wip, Hunt's, Healthy Choice, Frontera, Slim Jim, Blake's and Marie Callender.
Conagra Brands’ expected sales growth rate for fiscal 2023 is 5.2%. The stock carries a Zacks Rank #2 at present.
Chicago-headquartered Cboe Global Markets is one of the largest stock exchange operators by volume in the United States and a leading market globally for ETP trading. CBOE offers trading across a diverse range of products in multiple asset classes and geographies.
Cboe Global Markets’ expected sales growth rate for 2022 is 15.9%. The stock currently sports a Zacks Rank #1.
San Diego, CA-based QuidelOrtho is a key player in the provision of in-vitro diagnostics technologies designed for point-of-care settings, clinical labs and transfusion medicine. QDEL sells its products directly to end users and distributors for professional use.
QuidelOrtho’s sales are expected to surge 130.4% for 2022. The stock carries a Zacks Rank #2 at present.
Columbus, OH-based American Electric Power is a public utility holding company that generates, transmits and distributes electricity, natural gas and other commodities. AEP is one of the largest integrated utilities in the United States, serving more than 5.5 million customers in 11 states.
American Electric Power’s expected sales growth for 2022 is 10.6%. The company, at present, carries a Zacks Rank #2.
Headquartered in Norwell, MA, Clean Harbors is a leading provider of environmental, energy and industrial services in North America. CLH operates the largest number of hazardous waste incinerators, landfills and treatment, storage and disposal facilities.
Clean Harbors’ expected sales growth rate for 2022 is 35%. 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 Robust Sales Growth to Combat Recession Fears
Concerns like the persistent disruptions in the global supply chain system, record-high inflation and the continuation of higher interest rate monetary policy globally are weighing on investor sentiments. These have led to an increase in recession risks in the next six-to-nine months.
Amid such concerns and market volatility, investors are cautious about entering the market. So, a conventional stock-picking strategy is the need of the hour for generating robust returns. One such method is picking stocks with steady sales growth. In this regard, stocks like Conagra Brands, Inc. (CAG - Free Report) , Cboe Global Markets, Inc. (CBOE - Free Report) , QuidelOrtho Corporation (QDEL - Free Report) , American Electric Power Company, Inc. (AEP - Free Report) and Clean Harbors, Inc. (CLH - Free Report) are worth considering.
While assessing any company, revenues are often more scrutinized than earnings. This is because investors want to make sure that a business has the capability of generating more sales over time to cater to an expanding customer base. Stable or declining sales growth indicates obstacles at the company. Stagnant companies may generate near-term profit but do not ensure enough growth to attract new investors.
Without solid revenue growth, bottom-line improvement may not be sustainable over the long term. While a company can show earnings strength by lowering costs, continuous bottom-line improvement usually requires robust sales growth.
Yet, sales growth alone doesn’t indicate much about a company’s prospects. So, taking into account a company’s cash position along with its sales number can prove to be a sensible investment strategy. Substantial cash in hand and a steady cash flow give a company more flexibility with respect to business decisions and potential investments.
Selecting the Potential 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 16 stocks that qualified the screening:
Conagra Brands, based in Chicago, is a leading branded food company in North America. Some iconic brands of CAG are Reddi-Wip, Hunt's, Healthy Choice, Frontera, Slim Jim, Blake's and Marie Callender.
Conagra Brands’ expected sales growth rate for fiscal 2023 is 5.2%. The stock carries a Zacks Rank #2 at present.
Chicago-headquartered Cboe Global Markets is one of the largest stock exchange operators by volume in the United States and a leading market globally for ETP trading. CBOE offers trading across a diverse range of products in multiple asset classes and geographies.
Cboe Global Markets’ expected sales growth rate for 2022 is 15.9%. The stock currently sports a Zacks Rank #1.
San Diego, CA-based QuidelOrtho is a key player in the provision of in-vitro diagnostics technologies designed for point-of-care settings, clinical labs and transfusion medicine. QDEL sells its products directly to end users and distributors for professional use.
QuidelOrtho’s sales are expected to surge 130.4% for 2022. The stock carries a Zacks Rank #2 at present.
Columbus, OH-based American Electric Power is a public utility holding company that generates, transmits and distributes electricity, natural gas and other commodities. AEP is one of the largest integrated utilities in the United States, serving more than 5.5 million customers in 11 states.
American Electric Power’s expected sales growth for 2022 is 10.6%. The company, at present, carries a Zacks Rank #2.
Headquartered in Norwell, MA, Clean Harbors is a leading provider of environmental, energy and industrial services in North America. CLH operates the largest number of hazardous waste incinerators, landfills and treatment, storage and disposal facilities.
Clean Harbors’ expected sales growth rate for 2022 is 35%. 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