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3 Highly-Ranked Stocks Displaying Attractive Earnings Growth

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·5 min read
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Today, price action within the market has been powerful and undoubtedly welcomed by market participants. Investors are hopeful that this bullish action can sustain itself, as the first quarter of 2022 has been one of the harshest market environments in some time.

We’ve seen some of investors’ favorite stocks undergo double-digit valuation slashes, mainly within tech and high-growth stocks. A hawkish Fed has caused these stocks to come to a screeching halt, but things seem to be turning around with a more precise economic roadmap.

If the market can sustain this strength, the rebound will be massive. Investors need to have the right stocks in their portfolios amid a rebounding market.

A great way to find these expected winners is by utilizing the Zacks Rank – one of the most potent market tools. Three companies that rank highly currently include Allegheny Technologies ATI, Applied Industrial Technologies AIT, and Black Stone Minerals BSM.

All three companies sport the highly coveted Zacks Rank #1 (Strong Buy) with strong forecasted bottom-line growth rates. Let’s get into why these three companies would be solid bets for any portfolio.

Allegheny Technologies

Allegheny Technologies ATI is a global manufacturer of technically advanced specialty materials and complex components, with its largest market being aerospace and defense – particularly jet engines.

Year-to-date, share performance has been stellar. Penciling in a massive 70% return, shares have shown little signs of slowing down and have easily crushed the S&P 500’s decline of nearly 17%. Shares have been on a solid uptrend throughout the entire year.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Even with solid share appreciation, the company’s forward price-to-sales ratio is sitting nicely at 1.0X, well below highs of 1.3X earlier in the year and just a marginal amount above its median of 0.8X over the last five years. Additionally, the current value represents a staggering 73% discount relative to the S&P 500’s value of 4.1X.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In addition, analysts have been positively revising their estimates across the board over the last 60 days. For the upcoming quarter, the Consensus Estimate Trend has soared 41% up to $0.31 per share, reflecting a massive triple-digit growth in earnings of 360% from the year-ago quarter.

Furthermore, for the entire current fiscal year, the Zacks Consensus EPS Estimate sits at $1.26, reflecting a mind-boggling triple-digit growth in annual EPS of 870% year-over-year.

Applied Industrial Technologies

Applied Industrial Technologies AIT distributes value-added industrial products, including engineered fluid power components, bearings, specialty flow control solutions, power transmission products, and other miscellaneous industrial supplies.

Throughout 2022, shares have shown a high level of relative strength compared to many other companies. Year-to-date, shares have declined a marginal 0.8%, still more than enough to crush the S&P 500’s performance. Simply put, in a market filled with red year-to-date returns, shares of AIT have been highly defensive.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In addition to defensive shares, the company is also sporting attractive valuation levels. AIT’s forward earnings multiple sits nicely at 15.9X, well below its median of 17.6X over the last five years, and nowhere near 2021 highs of 26.4X. Furthermore, the value represents a sizable 10% discount relative to the S&P 500’s forward P/E ratio of 17.7X.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Analysts have been upping their earnings outlook across the board over the last 60 days. The Consensus Estimate Trend has climbed a notable 5% up to $1.68 per share for the upcoming quarter, displaying a sizable 11% growth in the bottom-line from the year-ago quarter.

The Zacks Consensus Estimate for the current fiscal year’s earnings sits nicely at $6.24 per share – a 30% upwards jump in earnings year-over-year.

Black Stone Minerals

Black Stone Minerals BSM, based in Houston, owns oil and natural gas minerals primarily in the United States.

Share performance throughout 2022 has been more than stellar. Year-to-date, shares have returned a mighty 61%, easily smoking the general market’s return. Investors have defended this stock all throughout the year, buying on every slight pullback.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

BSM also sports attractive valuation levels, although shares have appreciated immensely year-to-date. Its current forward earnings multiple sits attractively at 10.1X, nowhere near 2018 highs of 27.1X, and well below its median of 16.9X over the last five years.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Like the companies above, analysts have been upping their earnings outlook across the board over the last 60 days, with a 100% revision agreement. For the upcoming quarterly release in August, the Consensus Estimate Trend has climbed a mighty 19% up to $0.38 per share, reflecting a sizable growth in quarterly earnings of 52% compared to the year-ago quarter.

Additionally, for the current fiscal year, the Zacks Consensus Estimate has climbed 17% up to $1.54 per share, displaying another sizable growth in earnings of 65% year-over-year.

Bottom Line

Investors hope that the recent market strength is here to stay. It feels more than time for a rebound after one of the most exhausting quarters in history. To capture a multitude of gains among the rebound, investors must pick highly-ranked stocks, such as the ones above.

All three companies sport the highly coveted Zacks Rank #1 (Strong Buy), have attractive valuation levels, have robust forecasted bottom-line growth, and have strong share performance year-to-date.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Allegheny Technologies Incorporated (ATI) : Free Stock Analysis Report
 
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
 
Black Stone Minerals, L.P. (BSM) : Free Stock Analysis Report
 
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