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How to Screen for the Best Growth Stocks

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  • (0:45) - How To Find High Growth Stocks
  • (6:30) - Tracey’s Top Stock Picks
  • (17:20) - Episode Roundup: BOOT, AYX, RDHL, IIPR, SPSC              
  •                 Podcast@Zacks.com

Welcome to Episode #202 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

This week, Tracey has gone solo to discuss how to find the best growth stocks.

The Zacks Rank covers about 4400 companies. That’s a lot of choice. How does an investor interested in the hot growth stocks narrow it down to the best?

Screening for the Best Growth Stocks

Zacks.com’s Stock Screener has a lot of tools that investors can used to find great stocks.

To find growth stocks, you need growth. Obviously.

This screen included earnings growth of 20% this year, and 20% last year, to ensure that they have a track record of growth.

Investors should also look for sales growth of at least 10%.

The screen also included stocks over $5 and with a minimum average trading volume of 100,000 so that there were no microcaps.

And, to get rising earnings estimates, the screen included only Zacks #1 Rank (Strong Buy) stocks. That is a universe of just 220 stocks.

This screen returned 26 stocks.

5 of the Best Growth Stocks Right Now

1.       Boot Barn Holdings Inc. (BOOT - Free Report) is a niche retailer selling lifestyle and work boots at 240 stores and online. Same-store-sales were up 7.8% in the second quarter. The company raised full year guidance. Earnings are expected to be up 30.6% this year and sales growth is forecast to jump 14.6%. Shares are up 138% year-to-date. Can the rally continue?

2.       Alteryx (AYX - Free Report) , the data analytics company, has seen its shares fall 21.7% in the last 3 months. Yet earnings growth is expected to be 3000% this year as analysts expect $0.58 versus a loss of $0.02 last year. Revenue is forecast to surge 55.2%. Is this a buying opportunity with the shares pulling back?

3.       RedHill Biopharma (RDHL - Free Report) has gotten FDA approval for two key products including Talicia and Aemcolo. Both will be launching in the US in the fourth quarter and the first quarter of 2020. Sales are expected to grow 108% this year. The stock is just over $5. Should growth investors be checking in?

4.       Innovative Industrial Properties (IIPR - Free Report) is a REIT that specializes in cannabis growers for medical marijuana. It pays out 90% of its income to shareholders with a current yield of 3.7%. Sales are expected to rise 130% this year.

5.       SPS Commerce (SPSC - Free Report) provides retail cloud services. It has grown revenue for 75 consecutive quarters. Revenue is expected to rise 12.5% this year with earnings growth of 26%. Is this company a hidden gem?

What else should investors know about screening for growth?

Tune into this week’s podcast to find out.

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