There are many different ways to make money in the stock market. One proven way to earn great returns, which many investors use, is to invest in stocks within the best performing industries.
Studies have shown that tapping into an average stock in a strong industry can be a better option than picking an outstanding stock in a relatively poor-performing industry. This is not to say that any stock chosen at random in a great industry will make money, but by picking a strong industry, you certainly improve your odds.
This is where choosing a stock with a strong Zacks Rank, which also falls within an industry that sports a top Zacks Industry Rank, can prove successful. Zacks classifies stocks into 265 different industries. The Zacks Industry Rank is calculated by taking the average Zacks Rank for every stock in that industry category every day.
Now, let’s look at three great stocks that also fall within highly ranked industries:
1. H&E Equipment Services, Inc. (HEES - Free Report)
H&E rents and sells products for an array of industries, ranging from earthmoving and concrete equipment to cranes and generators. H&E is coming off a solid second quarter that saw its revenues jump by 3.0% to $249.4 million and its net income pop from $7.5 million to $9.9 million.
This Baton Rouge, Louisiana-based company is currently a Zacks Rank #1 (Strong Buy) and scored an “A” grade for both Value and Growth in our Style Scores system. H&E is part of the “Manufacturing – Construction and Mining” industry, which currently ranks #4 overall out of the 265 industries tracked by Zacks.
The company’s P/S ratio of 1 matches the industry average, while its EV/EBITDA of 5.21 outpaces the industry’s 9.99. The stock has gained 16.86% year-to-date, which tops the S&P 500’s 10.18%.
According to our current Zacks Consensus Estimates, the company’s earnings are expected to pop 21.21% this quarter, and its sales are set to jump 4.91% for the current quarter and 6.04% next quarter. Within the last 60 days, H&E has received one positive earnings estimate revision for its current quarter, next quarter, current year, and following year periods.
2. Anthem, Inc. (ANTM - Free Report)
This healthcare conglomerate serves more than 74 million people, including 40 million within its family-based healthcare plans. Anthem offers a wide range of medical and specialty products and owns Anthem Blue Cross and Blue Shield insurance.
Anthem is currently a Zacks Rank #2 (Buy) and sports an “A” grade for Value and a “B” for Momentum in our Style Scores system. The company’s standing in the “Medical – HMO’s” industry places Anthem in the top 4% of industries at #11 overall.
Anthem’s shares are currently trading at 15.48x earnings, which represents a discount to the market as a whole—and compared to the industry’s average. The company’s P/B ratio of 1.82 also marks a discount to the industry and some of its biggest competitors, including Aetna (AET - Free Report) . Also, its 45.11% gain over the past year crushes the S&P 500 average and tops the industry’s 32.24% gain.
Based on our current consensus estimates, Anthem’s sales are projected to grow 4.74% this quarter and 5.66% for the year. The company’s earnings are projected to gain 7.51% for the year.
3. Amtech Systems, Inc. (ASYS - Free Report)
Amtech is a supplier of production and automation systems and related supplies for the manufacture of solar cells, semiconductors, and silicon wafers. The company sits within the #3 ranked “Semiconductor – General” industry, which places Amtech in the top 1% of industries tracked by Zacks.
Despite resting near its 52-week high, Amtech stock could still have room for continued growth down the line. The Tempe, Arizona-based company’s projected full-year EPS growth of 125% crushes the industry average of 38.69% and blows away semiconductor giant Nvidia’s (NVDA - Free Report) projected 40.13% growth.
Based on our current consensus estimates, the company’s sales are projected to climb 9.17% in the current quarter and 29.83% for the year. Amtech’s 170.82% year-to-date price change thoroughly outpaces the industry average of 51.40% and crushes the S&P 500 average of 10.18%, meaning that it has been one of the hottest stocks in this strong industry.
Amtech is currently a Zacks Rank #1 (Strong Buy) and sports a “B” grade for Growth and an “A” for Momentum in our Style Scores system.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away. Download the new report now>>