3 Fast-Growing Earnings Stocks Set to Outperform
The S&P 500 Index, which is the benchmark for the U.S. market, has grown its annual earnings per share (not inflation adapted) by 41% over the last five years (8.2% annually), producing a 60.3% growth in the share price to $3,237.18 at close on Jan. 7.
Even though past performance is not a guarantee for future results, selecting companies that have posted more than 41% growth in their annual earnings per share over the observed period gives your search more chances to uncover stocks with a high potential to outperform.
To provide investors with a reliable estimate of future earnings growth, this search accounts for earnings per share without non-recurring items, as this metric excludes one-time entries.
Wendy's
The chart below exhibits that The Wendy's Co. (NASDAQ:WEN) has grown its trailing 12-month earnings per share without non-recurring items by nearly 61% over the last five years, pushing the share price up 121.2% to $21.96 at close on Tuesday. The stock surpassed the S&P 500 index by 80.2% over the same period.
The Dublin, Ohio-based quick-service restaurant chain has a market capitalization of $4.96 billion, a price-earnings ratio of 39.21 versus the industry median of 24.7 and a price-sales ratio of 3.1 versus the industry median of 0.95.
The stock has an overweight recommendation rating from Wall Stret sell-side analysts, with a price target of $22.74.
Trian Fund Management, L.P. is the biggest fund holder of the company with 11.78% of outstanding shares, followed by The Vanguard Group Inc with 7.72% and Invesco Ltd with 4.78%.
CTS
The chart below illustrates that CTS Corp. (NYSE:CTS) has grown its trailing 12-month earnings per share without non-recurring items by nearly 56% over the past five years. As a result, CTS's share price rose 81.4% to close at $30.06 on Tuesday, topping the S&P 500 index by 4.5% over the same period.
The company is an Illinois-based producer and seller of a broad range of electronic components serving original equipment manufacturers active in several industries. The stock has a market capitalization of $980 million, a price-earnings ratio of 23.12 versus the industry median of 19.72 and a price-sales ratio of 2.11 compared to the industry median of 1.12.
The stock has Wall Street overweight recommendation rating and a price target of $32.33 per share.
Wellington Management Group LLP is the largest fund holder of the company with 8.56% of outstanding shares, followed by Price T Rowe Associates Inc with 8.19% and Mario Gabelli with 6.38%.
SmartFinancial
The chart below shows that SmartFinancial Inc. (NASDAQ:SMBK) has grown its trailing 12-month earnings per share without non-recurring items by 56% over the past five years, which caused the share price to increase 66.2% to close at $22.60 on Tuesday.
The Knoxville, Tennessee-based holding of a regional bank has a market cap of $315.7 million, a price-earnings ratio of 12.02 compared to the industry median of 12.07 and a price-sales ratio of 3.51 versus the industry median of 2.98.
The stock has an overweight recommendation rating from Wall Street and a price target of $24.29 per share.
With 4.06% of outstanding shares, Banc Funds Co LLC is the company's biggest fundholder, followed by The Vanguard Group Inc with 3.95% and Private Capital with 3.53%.
Disclosure: I have no positions in any securities mentioned in this article.
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