For Immediate Release
Chicago, IL – May 13, 2020 - Stocks in this week’s article are JAKKS Pacific Inc (JAKK - Free Report) , Avinger Inc (AVGR - Free Report) , Energous Corp. (WATT - Free Report) , FireEye Inc. (FEYE - Free Report) and Proteostasis Therapeutics Inc. (PTI - Free Report) .
5 Top Stocks with Rising P/E to Bet On
Investors always look for stocks with low P/E ratios as the measure indicates undervaluation. This ratio is obtained by dividing a stock’s current market price with its historical or estimated earnings. It delivers how much an investor needs to shell out per dollar of earnings.
In fact, the golden rule is – the lower the P/E of a stock, the higher will be its value for investors. This is because value investors believe that a stock's current market price is not reflective of its historical/future earnings and therefore chances of outperformance are higher.
But there is another side to the story that points to stocks with an increasing P/E. But this often-overlooked trend can prove pivotal in finding great stocks. Let’s dig a little deeper.
How Can Rising P/E Be Helpful?
Investors should note that stock prices move in tandem with earnings performance. Ifearnings come in stronger, the price of a stock soars. Solid quarterly earnings and guidance in turn boost the earnings forecast, leading to stronger demand for the stock and an uptrend in its price.
So, if the price is rising steadily, it means that investors are assured of the stock’s fundamental strength, expect some strong positives out of it as well as solid and faster earnings growth. Moreover, studies have revealed that stocks have seen their P/E ratios jump over 100% from their breakout point in the cycle. So, if you can pick stocks early in their breakout cycle, you can end up seeing considerable gains.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/921291/5-top-stocks-with-rising-pe-to-bet-on
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