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5 Top Stocks With Robust Sales Growth Worth Investing in Now

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·5 min read
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Sales growth is a major financial indicator, which is often neglected while searching for a profitable investment strategy. Maintaining stable sales growth is vital for any business in the current market scenario.

Companies are always looking for ways to boost their marketing initiatives to drive revenues. Revenues are generally more closely monitored than earnings when assessing the growth of a business.

It is worth keeping in mind that when companies incur a loss, albeit briefly, they are valued on their revenues, as top-line growth (or decline) is usually an indicator of a firm’s future earnings performance.

So, the Price-to-Sales (P/S) ratio can be an apt metric for stock valuation. It remains a major stock selection criterion as management usually has limited opportunities to manipulate revenues, unlike earnings. Thus, the P/S ratio is subject to lesser influence than the Price-to-Earnings ratio.

Sales growth in isolation, however, does not assure success. Considering a company’s cash position, along with its sales number, can be a more dependable strategy. Substantial cash in hand and steady cash flow give a company more flexibility with respect to business decisions and investments.

Choosing the Winning Stocks

In order to shortlist stocks with impressive sales growth and a high cash balance, we have selected 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow more than $500 million as our main screening parameters.

But sales growth and cash strength are not the absolute criteria for selecting stocks. Hence, we have added certain other factors to arrive at a winning strategy.

P/S Ratio less than X-Industry: This metric determines the value placed on each dollar of a company’s revenues. The lower the ratio, the better it is for picking a stock since the investor is paying less for each unit of sales.

% Change F1 Sales Estimate Revisions (four weeks) greater than X-Industry: Estimate revisions, better than the industry, are often seen to trigger an increase in stock price.

Operating Margin (average last five years) greater than 5%: Operating margin measures how much every dollar of a company's sales translates into profits. A high ratio indicates that the company has good cost control and sales are increasing faster than costs — an optimal situation.

Return on Equity (ROE) greater than 5%: This metric will ensure that sales growth is translated into profits and the company is not hoarding cash. A high ROE means that the company is spending wisely and is in all likelihood profitable.

Zacks Rank less than or equal to 2: Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform, irrespective of the market environment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Here are five of the 18 stocks that qualified the screening:

Headquartered in Menomonee Falls, WI, Kohl’s Corp. KSS is a U.S.-based department store chain that operates specialty department stores and an e-commerce site in the United States. KSS operates more than 1,100 stores across 49 states, as well as online at Kohl's.com and on the Kohl's app.

Kohl’s expected sales growth rate for fiscal 2022 is 24.1%. The stock currently sports a Zacks Rank #1.

Emerson Electric Co. EMR is a diversified global engineering and technology company, with a presence in Europe, the Americas and Asia, Middle East & Africa. Headquartered in St. Louis, MO, EMR offers a wide range of products and services to customers in consumer, commercial and industrial markets.

Emerson Electric’s expected sales growth rate for fiscal 2022 is 6.1%. It currently carries a Zacks Rank #2.

Based in Chicago, IL, Cboe Global Markets, Inc. CBOE is one of the largest stock exchange operators by volume in the United States and a leading market globally for ETP trading. CBOE’s trading venues include the largest options exchange in the United States and the largest stock exchange by value traded in Europe.

Cboe Global’s sales are expected to grow 15.7% for 2021. The stock carries a Zacks Rank #2 at present.

Headquartered in Bermuda, Athene Holding Ltd. ATH offers various insurance and reinsurance retirement products across the United States and Bermuda. ATH operates mainly through three organic channels — retail, flow reinsurance and institutional.

Athene’s expected sales growth rate for 2021 is 31%. The stock carries a Zacks Rank #2 at present.

Expeditors International of Washington Inc. EXPD is a leading third-party logistics provider. EXPD, based in Seattle, WA, is engaged in the business of global logistics management, including international freight forwarding and consolidation, for both air and ocean freight.

Expeditors International’s expected sales growth rate for 2021 is 52.7%. The stock carries a Zacks Rank #2 at present.

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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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Emerson Electric Co. (EMR) : Free Stock Analysis Report
 
Kohl's Corporation (KSS) : Free Stock Analysis Report
 
Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report
 
Cboe Global Markets, Inc. (CBOE) : Free Stock Analysis Report
 
Athene Holding Ltd. (ATH) : Free Stock Analysis Report
 
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