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Analyst Blog

Patience is not an absence of action; rather it is timing. It waits on the right time to act."

Donald Trump’s win in the US presidential election not only took everyone by surprise but also sent markets into a tizzy. However, the markets soon recovered from the initial shock as investors came to terms with the mandate. We believe there could be significant market volatility over the next few months until Trump takes office in January.

In a highly volatile market scenario it is wiser to play safe and invest in growth stocks rather than in momentum or value ones. The increasing market volatility makes the momentum strategy highly risky, while value investing does not find many takers in the current market scenario.

Hence, investors are always looking to identify the best and brightest growth stocks to add to their portfolio and seek specific fundamental characteristics to discover these companies.  

Finding the best performing stocks is not an easy task. Just because a sector is moving higher does not mean that all stocks in that sector will be great performers. Only a few will outperform and those are the ones we want in our portfolio.

In an environment marked by volatility, a stress free way to identify the well performing stocks is by using our new style score system. We have been able to identify a few growth stocks, which have incredible potential in the near term.

How to Discover the Right Stocks?

With the help of our new style score system and the Zacks Stock Screener, we have zeroed in on five stocks that flaunt a solid Zacks Rank #1 (Strong Buy) or #2 (Buy), have a Growth Style Score of ‘A’ or ‘B’, have dividend yield of 3% or more, rising earnings estimates, and other valuation criteria.

Our Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. Our research shows that stocks with Growth Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or #2 offer the best investment opportunities in the growth investing space.

The 5 Picks

Seagate Technology plc (STX - Free Report)

Seagate is headquartered in Dublin, Ireland. The company offers a portfolio of hard disc drives, solid state drives and solid state hybrid drives. It offers a range of disk drive products for the enterprise, client compute and client non-compute market applications.

The company has a Growth Style Score of ‘A’ and currently offers a dividend yield of 6.77%. It has a long-term expected earnings growth rate of 4.05%. Moreover, over the last 60 days, most of the estimates moved upward leading the Zacks Consensus Estimate higher by 23.3% to $3.71 per share for fiscal 2017.

The company has also generated a return of 10.8% over the last one year. It delivered a positive earnings surprise of 11.2% in the last reported quarter. The company sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

SEAGATE TECH Price and Consensus

SEAGATE TECH Price and Consensus | SEAGATE TECH Quote

Intel Corporation (INTC - Free Report)

Based in Santa Clara, CA, Intel is one of the world's largest semiconductor chipmakers. The company develops advanced integrated digital technology products, primarily integrated circuits for industries such as computing and communications.

Intel has a Zacks Rank #2 and a long-term expected earnings growth rate of 8.42%. The company has a Growth Style Score of ‘B’ and currently offers a dividend yield of 3%. Moreover, over the last 60 days, most of the estimates moved upward to raise the Zacks Consensus Estimate by 5.9% to $2.67 per share for fiscal 2016.

The company has also generated a return of 7.4% over the last one year. It has delivered positive earnings surprises in the last four quarters with an average surprise of 12.1%.

INTEL CORP Price and Consensus

Garmin Ltd. (GRMN - Free Report)

Garmin International is a subsidiary of Garmin Ltd. Olathe, KS-based, Garmin is an original equipment manufacturer (OEM) of navigation and communication equipment that incorporates the global positioning system (GPS) technology.

The company has a Zacks Rank #2 and a long-term expected earnings growth rate of 8.35%. The company has a Growth Style Score of ‘B’ and currently offers a dividend yield of 4.08%. Moreover, over the last 60 days, most of the estimates moved upward.  The Zacks Consensus Estimate increased 6.7% to $2.69 per share for fiscal 2016.

The company has also generated a return of 45.4% over the last one year. It has delivered positive earnings surprises in the last four quarters with an average surprise of 35.7%.

GARMIN LTD Price and Consensus

Preferred Apartment Communities, Inc. (APTS - Free Report)

Preferred Apartment Communities is based in Atlanta. The company is a real estate investment trust. The company acquires and operates multifamily properties primarily in the U.S. It also acquires senior mortgage loans, subordinate loans or mezzanine debt secured by interests in multifamily properties, membership or partnership interests in multifamily properties and other multifamily assets.

Preferred Apartment Communities has a Zacks Rank #2 and a long-term expected earnings growth rate of 7%. The company has a Growth Style Score of ‘B’ and currently offers a dividend yield of 6.21%. Moreover, over the last 60 days, all the estimates moved upward to raise the Zacks Consensus Estimate by 2.4% to $1.30 per share for fiscal 2016.

The company has also generated a return of 26.6% over the last one year. It has delivered positive earnings surprises in two out of the last four quarters with an average surprise of 4.6%.

PREFERRED APTMT Price and Consensus

CenterPoint Energy, Inc. (CNP - Free Report)

CenterPoint Energy is a domestic energy delivery company that includes electricity transmission and distribution, natural gas distribution and sales, interstate pipeline and gathering operations. It serves customers in Arkansas, Illinois, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Oklahoma, Texas, and Wisconsin.

CenterPoint has a Zacks Rank #2 and a long-term expected earnings growth rate of 5.5%. The company has a Growth Style Score of ‘B’ and currently offers a dividend yield of 4.49%. Moreover, over the last 60 days, most of the estimates moved upward to raise the Zacks Consensus Estimate by 2.6% to $1.18 per share for fiscal 2016.

The company has also generated a return of 33.3% over the last one year. It has delivered positive earnings surprises in three out of the last four quarters with an average surprise of 5.1%.

CENTERPOINT EGY Price and Consensus

Bottom Line

We are optimistic about these stocks given their expected forward growth rates and estimate revision trends. We thus advise investors to consider these banking on the Zacks Rank and style score system as these could yield impressive returns going forward.

So what you are waiting for?  If you are looking for stocks that are well-equipped to overcome the bumps down the road, take a look at these five stocks.

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