U.S. markets open in 1 hour 57 minutes
  • S&P Futures

    3,830.25
    +2.25 (+0.06%)
     
  • Dow Futures

    31,305.00
    -66.00 (-0.21%)
     
  • Nasdaq Futures

    12,843.00
    +11.25 (+0.09%)
     
  • Russell 2000 Futures

    2,195.80
    -4.20 (-0.19%)
     
  • Crude Oil

    62.40
    -1.13 (-1.78%)
     
  • Gold

    1,759.70
    -15.70 (-0.88%)
     
  • Silver

    26.83
    -0.85 (-3.07%)
     
  • EUR/USD

    1.2118
    -0.0068 (-0.56%)
     
  • 10-Yr Bond

    1.5180
    0.0000 (0.00%)
     
  • Vix

    29.23
    +7.89 (+36.97%)
     
  • GBP/USD

    1.3936
    -0.0077 (-0.55%)
     
  • USD/JPY

    106.2500
    +0.0200 (+0.02%)
     
  • BTC-USD

    47,091.69
    -2,683.25 (-5.39%)
     
  • CMC Crypto 200

    940.47
    +7.33 (+0.79%)
     
  • FTSE 100

    6,558.03
    -93.93 (-1.41%)
     
  • Nikkei 225

    28,966.01
    -1,202.26 (-3.99%)
     

3 Reasons Why Growth Investors Shouldn't Overlook Delek Logistics Partners, L.P. (DKL)

  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·3 min read
  • Oops!
    Something went wrong.
    Please try again later.

Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock.

By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.

However, it's pretty easy to find cutting-edge growth stocks with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.

Delek Logistics Partners, L.P. (DKL) is one such stock that our proprietary system currently recommends. The company not only has a favorable Growth Score, but also carries a top Zacks Rank.

Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Here are three of the most important factors that make the stock of this company a great growth pick right now.

Earnings Growth

Arguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for Delek Logistics Partners, L.P. is 8.2%, investors should actually focus on the projected growth. The company's EPS is expected to grow 40.3% this year, crushing the industry average, which calls for EPS growth of 12.3%.

Impressive Asset Utilization Ratio

Growth investors often overlook asset utilization ratio, also known as sales-to-total-assets (S/TA) ratio, but it is an important feature of a real growth stock. This metric shows how efficiently a firm is utilizing its assets to generate sales.

Right now, Delek Logistics Partners, L.P. has an S/TA ratio of 0.62, which means that the company gets $0.62 in sales for each dollar in assets. Comparing this to the industry average of 0.33, it can be said that the company is more efficient.

In addition to efficiency in generating sales, sales growth plays an important role. And Delek Logistics Partners, L.P. is well positioned from a sales growth perspective too. The company's sales are expected to grow 5.2% this year versus the industry average of 1.4%.

Promising Earnings Estimate Revisions

Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

There have been upward revisions in current-year earnings estimates for Delek Logistics Partners, L.P. The Zacks Consensus Estimate for the current year has surged 48.4% over the past month.

Bottom Line

While the overall earnings estimate revisions have made Delek Logistics Partners, L.P. a Zacks Rank #1 stock, it has earned itself a Growth Score of B based on a number of factors, including the ones discussed above.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination positions Delek Logistics Partners, L.P. well for outperformance, so growth investors may want to bet on it.


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
 
Delek Logistics Partners, L.P. (DKL) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research