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November's strong track record has investors eyeing stocks with steady earnings growth.
Earnings acceleration highlights companies whose profit growth rates are rising faster each quarter.
GRPN, BCTX and INNV meet screening criteria, showing powerful EPS acceleration and liquidity strength.
November is around the corner, and historically, it has been a strong month for stocks. Therefore, corporate executives and analysts are focusing on companies with steady earnings growth, a key indicator of profitability. However, earnings acceleration has an even stronger impact on boosting stock prices. Studies show that successful stocks experience an earnings boost before their stock price rises.
To that end, Groupon, Inc. (GRPN - Free Report) , BriaCell Therapeutics Corp. (BCTX - Free Report) , and InnovAge Holding Corp. (INNV - Free Report) are showcasing strong earnings acceleration.
What is Earnings Acceleration?
Earnings acceleration is the incremental growth in a company’s earnings per share (EPS). In other words, if a company’s quarter-over-quarter earnings growth rate increases within a stipulated time frame, it can be called earnings acceleration.
In the case of earnings growth, you pay for something that is already reflected in the stock price. However, earnings acceleration helps identify stocks that haven’t yet caught the attention of investors, and once secured, will invariably lead to a rally in the share price. This is because earnings acceleration considers both the direction and magnitude of growth rates.
An increasing percentage of earnings growth means that the company is fundamentally sound and has been on the right track for a considerable period. Meanwhile, a sideways percentage of earnings growth indicates a period of consolidation or slowdown, while a decelerating percentage of earnings growth may drag prices down.
Screening Parameters Using Research Wizard:
Look at stocks for which the last two quarter-over-quarter percentage earnings per share (EPS) growth rates exceed the previous periods’ growth rates. The projected EPS growth rates for the upcoming quarter are expected to exceed those of prior periods.
EPS % Projected Growth (Q1)/(Q0) greater than EPS % Growth (Q0)/(Q-1): The projected growth rate for the current quarter (Q1) over the completed quarter (Q0) has to be greater than the growth rate from the completed quarter (Q0) over one quarter ago (Q-1).
EPS % Growth (Q0)/(Q-1) greater than EPS % Growth (Q-1)/(Q-2): The growth rate for the completed quarter (Q0) over one quarter ago (Q-1) has to be greater than the growth rate from one quarter ago (Q-1) over two quarters ago (Q-2).
EPS % Growth (Q-1)/(Q-2) greater than EPS % Growth (Q-2)/(Q-3): The growth rate from one quarter ago (Q-1) over two quarters ago (Q-2) has to be greater than the growth rate from two quarters ago (Q-2) over three quarters ago (Q-3).
In addition to this, we have added the following parameters:
Current Price greater than or equal to $5: This screens out low-priced stocks.
Average 20-day volume greater than or equal to 50,000: High trading volume implies that the stocks have adequate liquidity.
The above criteria narrowed the universe of around 7,735 stocks to only four. Here are the top three stocks:
Groupon
Groupon runs a marketplace by linking consumers to merchants through discounted goods and services across North America and beyond. The company has a Zacks Rank #1 (Strong Buy). GRPN’s expected earnings growth rate for the current year is 153%. You can see the complete list of today’s Zacks #1 Rank stocks here.
BriaCell Therapeutics
BriaCell Therapeutics is developing next-generation immunotherapies to fight cancer. The company has a Zacks Rank #2 (Buy). BCTX’s expected earnings growth rate for the current year is 81.6%.
InnovAge
InnovAge provides a range of medical and ancillary services to help seniors live independently in their homes and communities. The company has a Zacks Rank #2. INNV’s expected earnings growth rate for the current year is 209.1%.
You can sign up now for your 2-week free trial to the Research Wizard and start using this screen in your 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.
Image: Bigstock
Top 3 Earnings Acceleration Buys for November
Key Takeaways
November is around the corner, and historically, it has been a strong month for stocks. Therefore, corporate executives and analysts are focusing on companies with steady earnings growth, a key indicator of profitability. However, earnings acceleration has an even stronger impact on boosting stock prices. Studies show that successful stocks experience an earnings boost before their stock price rises.
To that end, Groupon, Inc. (GRPN - Free Report) , BriaCell Therapeutics Corp. (BCTX - Free Report) , and InnovAge Holding Corp. (INNV - Free Report) are showcasing strong earnings acceleration.
What is Earnings Acceleration?
Earnings acceleration is the incremental growth in a company’s earnings per share (EPS). In other words, if a company’s quarter-over-quarter earnings growth rate increases within a stipulated time frame, it can be called earnings acceleration.
In the case of earnings growth, you pay for something that is already reflected in the stock price. However, earnings acceleration helps identify stocks that haven’t yet caught the attention of investors, and once secured, will invariably lead to a rally in the share price. This is because earnings acceleration considers both the direction and magnitude of growth rates.
An increasing percentage of earnings growth means that the company is fundamentally sound and has been on the right track for a considerable period. Meanwhile, a sideways percentage of earnings growth indicates a period of consolidation or slowdown, while a decelerating percentage of earnings growth may drag prices down.
Screening Parameters Using Research Wizard:
Look at stocks for which the last two quarter-over-quarter percentage earnings per share (EPS) growth rates exceed the previous periods’ growth rates. The projected EPS growth rates for the upcoming quarter are expected to exceed those of prior periods.
EPS % Projected Growth (Q1)/(Q0) greater than EPS % Growth (Q0)/(Q-1): The projected growth rate for the current quarter (Q1) over the completed quarter (Q0) has to be greater than the growth rate from the completed quarter (Q0) over one quarter ago (Q-1).
EPS % Growth (Q0)/(Q-1) greater than EPS % Growth (Q-1)/(Q-2): The growth rate for the completed quarter (Q0) over one quarter ago (Q-1) has to be greater than the growth rate from one quarter ago (Q-1) over two quarters ago (Q-2).
EPS % Growth (Q-1)/(Q-2) greater than EPS % Growth (Q-2)/(Q-3): The growth rate from one quarter ago (Q-1) over two quarters ago (Q-2) has to be greater than the growth rate from two quarters ago (Q-2) over three quarters ago (Q-3).
In addition to this, we have added the following parameters:
Current Price greater than or equal to $5: This screens out low-priced stocks.
Average 20-day volume greater than or equal to 50,000: High trading volume implies that the stocks have adequate liquidity.
The above criteria narrowed the universe of around 7,735 stocks to only four. Here are the top three stocks:
Groupon
Groupon runs a marketplace by linking consumers to merchants through discounted goods and services across North America and beyond. The company has a Zacks Rank #1 (Strong Buy). GRPN’s expected earnings growth rate for the current year is 153%. You can see the complete list of today’s Zacks #1 Rank stocks here.
BriaCell Therapeutics
BriaCell Therapeutics is developing next-generation immunotherapies to fight cancer. The company has a Zacks Rank #2 (Buy). BCTX’s expected earnings growth rate for the current year is 81.6%.
InnovAge
InnovAge provides a range of medical and ancillary services to help seniors live independently in their homes and communities. The company has a Zacks Rank #2. INNV’s expected earnings growth rate for the current year is 209.1%.
You can sign up now for your 2-week free trial to the Research Wizard and start using this screen in your 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.