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Accomplishing growth is extremely challenging in today’s multifaceted and fast-changing business environment. So, the companies have stepped up marketing initiatives over digital platforms and have become more professional about sales management to drive their top line.
Technological evolvement, which is bringing the world closer, further emphasizes the importance of sales and the need for companies to apply the right strategies and provide the right services to improve their selling.
Further, sales growth is an important metric for any company as it is a vital part of growth projections and instrumental in strategic decision-making. Unsurprisingly, sales growth gets more attention from investors in the investment process, as a healthy sales growth rate is usually a positive investment indicator.
However, sales growth in isolation doesn’t reveal too much about a company’s future performance. Though it provides investors an insight into product demand and pricing power, a huge sales number does not necessarily translate into profits.
Therefore, a consideration of a company’s cash position along with its 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 potential investments. Most importantly, an adequate cash position suggests that revenues are being channelized in the right direction.
Play Like a Champion
In order to shortlist stocks that have impressive sales growth along with a high cash balance, we added 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow greater than $500 million as our primary screening parameters.
However, sales growth and cash strength are not the absolute criteria for selecting stocks. So, we added a few other factors to arrive at a winning strategy.
Price-to-Sales (P/S) Ratio less than X-Industry: This metric measures 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 (4 Weeks) greater than X-Industry: Northward estimate revision has often been observed to trigger an increase in the stock price.
Operating Margin (Average Last 5 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 for the company.
Return on equity (ROE) greater than 5%: This metric will ensure that sales growth is getting translated into profits and the company is not hoarding cash. High ROE means 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.
Here are five of the eight stocks that qualified the screening:
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
Unique Zacks Analysis of Your Chosen Ticker
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5 Best Sales Growth Stocks to Keep an Eye On
Accomplishing growth is extremely challenging in today’s multifaceted and fast-changing business environment. So, the companies have stepped up marketing initiatives over digital platforms and have become more professional about sales management to drive their top line.
Technological evolvement, which is bringing the world closer, further emphasizes the importance of sales and the need for companies to apply the right strategies and provide the right services to improve their selling.
Further, sales growth is an important metric for any company as it is a vital part of growth projections and instrumental in strategic decision-making. Unsurprisingly, sales growth gets more attention from investors in the investment process, as a healthy sales growth rate is usually a positive investment indicator.
However, sales growth in isolation doesn’t reveal too much about a company’s future performance. Though it provides investors an insight into product demand and pricing power, a huge sales number does not necessarily translate into profits.
Therefore, a consideration of a company’s cash position along with its 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 potential investments. Most importantly, an adequate cash position suggests that revenues are being channelized in the right direction.
Play Like a Champion
In order to shortlist stocks that have impressive sales growth along with a high cash balance, we added 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow greater than $500 million as our primary screening parameters.
However, sales growth and cash strength are not the absolute criteria for selecting stocks. So, we added a few other factors to arrive at a winning strategy.
Price-to-Sales (P/S) Ratio less than X-Industry: This metric measures 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 (4 Weeks) greater than X-Industry: Northward estimate revision has often been observed to trigger an increase in the stock price.
Operating Margin (Average Last 5 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 for the company.
Return on equity (ROE) greater than 5%: This metric will ensure that sales growth is getting translated into profits and the company is not hoarding cash. High ROE means 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.
Here are five of the eight stocks that qualified the screening:
ARRIS International plc
WSFS Financial Corp. (WSFS - Free Report)
Euronet Worldwide, Inc. (EEFT - Free Report)
Raymond James Financial, Inc. (RJF - Free Report)
Two Harbors Investment Corp. (TWO - Free Report)
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
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
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »