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4 Top-Ranked Stocks to Buy for Stellar Earnings Growth

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Tirthankar Chakraborty
·4 min read
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Earnings growth, no doubt, is the most important variable that influences share price movement. And earnings are nothing but the company’s revenues over a given period of time, minus the cost of production. However, earnings expectations also play a vital role.

 

Quite often, we have seen a decline in the stock price despite earnings growth and a rally in the price following an earnings decline. This is largely a result of a company’s earnings failing to meet market expectations.

 

Earnings estimates embody analysts’ opinion on factors such as sales growth, product demand, competitive industry environment, profit margins and cost control. Thus, earnings estimates serve as a valuable tool while making investment decisions. Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.

 

Investors, thus, should be on the lookout for stocks that are ready to make a big move. Hence, it is important for investors to buy stocks that have historical earnings growth and are also seeing a rise in quarterly and annual earnings estimates.

The Winning Criteria:

In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we have added the following parameters:

 

Zacks Rank  equal to 1 (Only Zacks' 'Strong Buys' are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.) You can see the complete list of today’s Zacks #1 Rank stocks here.

 

5-Year Historical EPS Growth (%) greater than X-Industry (stocks with a strong EPS growth history).

 

% Change EPS F(0)/F(-1) greater than or equal to 5 (companies that saw year-over-year earnings growth of 5% or more in the last reported fiscal).

 

% Change Q1 Estimates over the last 4 weeks greater than zero (stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks).

 

% Change F1 Estimates over the last 1 week greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 1 week).

 

% Change F1 Estimates over the last 4 weeks greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 4 weeks).

 

The above criteria narrowed down the universe of around 7,839 stocks to only six. Here are the top four stocks:

 

Lithia Motors, Inc. LAD is one of the leading automotive retailers of new and used vehicles, and related services in the United States. The company’s expected earnings growth rate for the current and next year is 28.5% and 23%, respectively.

 

TopBuild Corp. BLD is an installer and distributor of insulation and other building products to the U.S. construction industry. The company’s expected earnings growth rate for the current and next year is 17.1% and 19.9%, respectively.

 

WESCO International, Inc. WCC is one of the largest players in the highly fragmented distribution market for electrical construction products in North America. The company’s expected earnings growth rate for the next year is 13.8%.

 

BRP Inc. DOOO designs, develops, manufactures and distributes recreational vehicles. The company’s expected earnings growth rate for the next year is 18.5%.

 

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

 

The Research Wizard is a great place to begin. It’s easy to use. Everything is in plain language. And it’s very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

 

Click here to sign up for a free trial to the Research Wizard today.

 

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

 

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance


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WESCO International, Inc. (WCC) : Free Stock Analysis Report
 
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
 
TopBuild Corp. (BLD) : Free Stock Analysis Report
 
BRP Inc. (DOOO) : Free Stock Analysis Report
 
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