As the bull market advances, one investment theme is still working very well: growth. And one of my favorite quick, push-button ways of finding it is to run the Zacks Premium Screen "Sales & Earnings Growth Winners."
I ran this screen today and, filtering through thousands of stocks, it produced only 23 names. I'll give you five of my favorites in a moment. First, let's review the screen criteria. Here's the basic description...
Strong and stable growth stocks with winning sales and earnings growth, effective management, good liquidity, and a Zacks Rank 1 or 2 with a Zacks Growth Style Score of A or B.
And here are the specific criteria...
• Zacks Rank <= 2
• Zacks Growth Style Score <= B
• Current Sales Growth >= 10%
• Current EPS Growth >= 10%
• Projected EPS Growth >= 10%
• ROE >= 10%
• Current Ratio >= 1
• Last Close (price) >= $5
• Avg. 20-Day Volume >= 100,000
My 5 Winners
The story here seems complicated with all the good and bad press that Facebook gets, from virtual reality to fake news. But that's what happens when you have 1.7 billion active monthly users and your sales grew over 50% this year to over $27 billion.
So let me simplify things and tell you where that mountain of revenue came from: $26.5 billion is from advertising and it's not the Fortune 1000 making it happen. It's small and medium-sized businesses (SMBs) around the globe who have realized the power of the greatest social network ever invented.
As I've said for a year while I've been recommending to buy the stock every time it pulls back 10% from new highs, the Facebook mechanics and tools of Social Targeting, Pixels, and Look-Alike Audiences are creating an access to sales that was previously unavailable to the SMBs.
Plus, those businesses have new marketing intelligence at their fingertips with Facebook's data analytics that tell them where their customers came from, which ads are working, and how to scale their ad spend for the next level of growth they are seeking.
And Facebook hasn't just stolen market share from Google Adwords. They've expanded the entire pie of online dollars being spent to drive sales. They are expected to grow sales another 33% next year. I bet those estimates will get beaten. Buy FB on the dips.
Ulta Beauty (ULTA)
This is one consumer brick-and-mortar story that has surprised all skeptics. What they don't understand is that women love the idea of an elegant-yet-accessible salon atmosphere right down the street that offers a wealth of luxurious cosmetics and services.
And Ulta's investors are learning something about loyalty from its customers as this sales growth story shows no signs of slowing down. Hitting a record $4.5 billion trailing 12-month revenues at the end of their third quarter in October, the company is expected to hit $4.81 billion by the end of their fiscal year in January, representing 22.6% sales growth.
But it keeps going into next year with projections by analysts of 18.6% top line growth as the company eclipses $5.7 billion in sales driven by store expansion and new beauty-loving customer acquisition. It's still time to believe in the Ulta story.
Broadcom is a textbook example of how the Zacks Rank can keep you invested in a growth stock quarter after quarter to ride meaningful long-term gains, or simply to trade the swings along the way. And another "beat and raise" quarter has AVGO back to the top of investor buy lists.
Since I first discovered this blue-chip technology "arms dealer" back in 2014 when it was trading $70, and still named Avago Technologies, it has quadrupled revenues to over $13 billion primarily through key acquisitions like LSI Logic and Broadcom, its new namesake.
You can take a closer look at why AVGO (they kept the original Avago stock symbol) remains a favorite among institutional investors -- which is really the same reason it consistently earns the highest Zacks rank every quarter: earnings momentum -- in my recent Bull of the Day article.
Ubiquiti Networks (UBNT)
Ubiquiti Networks, Inc. is a $4.8 billion manufacturer of broadband wireless solutions worldwide. Its products and solutions include routers, switches, transmitters, and antennas that support enterprise and consumer wi-fi networks and VoIP. The company specializes in communications and internet solution for rural and remote areas that lack wired infrastructure.
I was a fan of this company in 2014 and 2015 but they were hurt by the collapse in Emerging Markets like Russia during the oil bear market. Now the company's products and the stock are both in strong demand as sales have grown 19% in just the first nine months of 2016. And for the current fiscal year ending in June of 2017, sales are expected to vault from $595 million to $828 million, representing 39% growth.
Cross Country (CCRN)
Cross Country, Inc. is a $500 million provider of healthcare staffing services. I wanted a small cap company in this screen and I like this space as I own their major competitor, AMN Healthcare. As the labor market tightens, and healthcare needs for baby boomers expand, medical staffing will remain a strong area.
Cross Country also provides staffing of clinical research professionals and allied healthcare professionals, such as radiology technicians, rehabilitation therapists and respiratory therapists. Their staffing operations are complemented by other human capital management services, including search and recruitment, consulting, education and training and resource management services.
Any of these 5 stocks are a great place to start if you will be doing some portfolio rebalancing in the new year.
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ULTA SALON COSM (ULTA): Free Stock Analysis Report
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