Finding companies with the criteria you want isn’t always easy.  You could spend hours searching ticker after ticker, only to find companies which aren’t worthy of your hard earned cash.  An easier way to navigate through this is by using high quality stock screeners.  Screening helps investors narrow down companies to invest in based on their ability to meet every criteria selected.  Any company who misses even one of the criteria requirements will be filtered out.

This lets one easily choose ideal metrics.  Screens are effective because they sift out bad stocks and only keep the cream of the crop in.  It isn’t always easy to create an effective screen.  Our Zacks Premium Screens have helped with this, bringing profits to many investors over time.  Our predefined criteria are chosen carefully to capture special kinds of companies.

Today, we’ve dug up two tech stocks using one of our premium screens known as “Zacks #1 Growth Stocks”.  Some of the metrics of this screen is that the stock must have an average trading volume of at least 100,000 shares over the last 20 days, a Zacks Rank #1 (Strong Buy), and expected earnings growth north of 20% this year.  In addition to using the metrics on this great screen, I’ve added an additional metric which I feel is appropriate for investing in growth stocks 

I screened for stocks with a PEG under one. The PEG we use applies a 3-5 year projected growth rate. This was done so that I could find companies that are trading at a discount relative to their long term expected growth rate.  Let’s see what our modified premium screen has found for us today.

Stamps.com-STMP

Stamps.com is an Internet-based company which provides services for mailing or shipping letters, parcels, or packages anywhere in the United States.  Their clients include individuals, small businesses, and larger enterprises.  Stamps’ platform allows for users to select a carrier, print US postage or shipping labels from various carriers, schedule a pick-up, track packages, and more.  Like every stock that passes this screen, Stamps.com stock is a Zacks Rank #1 (Strong Buy).  The company’s EPS is projected to grow by 61.24% this year, and Stamps could surpass this level of growth since it has consistently topped our EPS expectations over each of the last four quarters.  Stamps saw revenues increase by 45.5% last year, and the company looks set to keep building on its momentous sales growth since it expects to see revenues to pick up by 55.97% this year.

STMP looks quite cheap relative to its growth expectations, and that’s what makes it an especially intriguing investment candidate.  The stock trades at a forward PE of 15.06, and it trades at a PEG of just 0.75.  It should be noted that a PEG under one may suggest that there is value present.  Many value stocks sell at a discount because they have higher levels of debt on their balance sheet.  Thankfully, STMP is not too leveraged at all since it has a debt-to-equity ratio of just 0.48.

Silicon Motion Technology Corporation-(SIMO Quick QuoteSIMO - Free Report)

Silicon Motion manufactures and markets universally compatible and low-power semiconductor solutions for the multimedia consumer electronics market.  The company sells its semiconductor solutions to OEMs (original equipment manufacturers) and design manufacturers.  SIMO stock has had considerable momentum over the last year, more than doubling in share price over that time span.  In the last three months alone shares have climbed 33% higher.  Silicon Motion stock has a PEG of 0.96, and it currently trades at a forward PE of 19.30.  The company has low levels of debt and a high amount of liquidity on its balance sheet, so it has desirable traits that investors would like to see from the value stocks they own.

SIMO has surpassed our EPS expectations in three of the last four quarters, and over that time span it has beaten our consensus estimate by an average of 14% per quarter.  Silicon’s earnings are projected to grow by 52.2% this year.  The company is forecasted to see high revenues growth this year as well, where sales are expected to increase by 45.61%,      

Bottom Line

Employing a high growth strategy can be volatile.  When taking risks on the growth potential of certain companies, you’ll probably want to see that shares are trading at a reasonable valuation relative to expected earnings growth.  One magical screening ingredient which can’t be overlooked is the Zacks Rank #1 (Strong Buy).  The rank helps to find companies which look like dependable earnings candidates.  The Zacks Premium Screens gives you access to the Zacks #1 Growth Stocks and 45 other premium screens designed to give you superior investment returns.

To use Zacks Premium Screens to find more stock picks based on criteria that’s most important to you— plus, gain access to the Zacks Rank for your stocks, mutual funds and ETFs; Zacks Style Scores, Equity Research Reports; Focus List portfolio of 50-longer-term stocks and more—start your 30-day free trial to Zacks Premium.

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