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Estimates Rising on These 5 Buy-Ranked Stocks

Sejuti Banerjea
·5 mins read

Earnings season gets into full swing this week as the big banks start reporting. And within the next few weeks we’ll have a better idea about the impact of the virus and the economy on companies, and therefore, our investments.  

It’s when we’ll get to know which companies could battle the storm better than others, which ones were temporarily boosted and which ones suffered temporarily but remain strong longer-term players.

All the conversation will revolve around the companies that met, exceeded or missed estimates. But it’s important to remember that not all estimates are created equal. When a company beats estimates easily, it may be that it genuinely did well. Or it may be that the expectations were set too low (as happened pretty broadly in the last quarter).

And then, there are those on which analysts acquire new information that makes them even more optimistic. So they raise estimates even before the earnings announcement. Buying these stocks early sets you up for bigger gains after the announcement. That’s what these picks are about because each of these companies have seen a 20%+ upward revision in estimates in the last four weeks-

Group 1 Automotive, Inc. GPI

Through its 119 dealerships in the U.S., 50 dealerships in the UK and 17 dealerships in Brazil, Group 1 Automotive is one of the largest automotive retailers in the world. It sells new and used cars and light trucks, after-market services, as well as maintenance and repair services.

Zacks Rank #1 (Strong Buy)

Growth Score A

Industry: Automotive - Retail and Whole Sales (top 1%, the top 50% outperform the bottom 50% of Zacks-classified industries by a factor of more than 2 to 1)

The Zacks Consensus Estimate for the to-be-reported quarter is up 29.87% in the last four weeks.

Valuation: The price to forward 12 months’ earnings (P/E) is 9.15X, which between the median value of 8.21X and much lower the high point of 9.75X over the past year. It’s also below the S&P 500’s 22.60X. So there is upside potential.

Lithia Motors, Inc. LAD

Lithia Motors, is one of the leading retailers of new and used vehicles, and related services in the U.S. offering 28 vehicle brands across 181 stores in 18 states and through its Lithia.com and DCHauto.com websites.

Zacks Rank #1

Growth Score A

Industry: Automotive - Retail and Whole Sales (top 1%)

The Zacks Consensus Estimate for the to-be-reported quarter is up 57.96% in the last four weeks.

Valuation: The price to forward 12 months’ earnings (P/E) is 14.88X, which is close to the median value of 12.25X and much lower than its high point of 20.41X over the past year. It’s also below the S&P 500’s 22.60X. So upside potential exists.

Thor Industries, Inc. THO

Thor Industries, through its subsidiaries, is the largest manufacturer of RVs in the world. The American company builds a variety of RVs in North America and Europe, and sells those vehicles along with related parts and accessories to independent, non-franchise dealers throughout the United States, Canada and Europe.

Zacks Rank #1

Growth Score A

Industry: Building Products - Mobile Homes and RV Builders (top 8%)

The Zacks Consensus Estimate for the to-be-reported quarter is up 22.16% in the last four weeks.

Valuation: The price to forward 12 months’ earnings (P/E) is 14.13X, which is close to the median value of 13.79X and much lower than its high point of 35.90X over the past year. It’s also below the S&P 500’s 22.60X. So there’s quite a bit of scope for upside.

RentACenter, Inc. RCII

Rent-A-Center, Inc. is the largest rent-to-own operator in the United States, offering durable goods such as consumer electronics, appliances, computers, furniture and accessories.

Zacks Rank #1

Growth Score A

Industry: Consumer Services - Miscellaneous (top 27%)

The Zacks Consensus Estimate for the to-be-reported quarter is up 64.23% in the last four weeks.

Valuation: The price to forward 12 months’ earnings (P/E) is 10.07X, which is below the median value of 10.50X over the past year. It’s also below the S&P 500’s 22.60X. So the shares are undervalued.

The Scotts MiracleGro Company SMG

The Scotts Miracle-Gro Company is a leading producer and marketer of branded garden and consumer lawn products including lawn care, gardening and landscape, hydroponics.

Zacks Rank #2 (Buy)

Growth Score A

Industry: Fertilizers (top 40%)

The Zacks Consensus Estimate for the to-be-reported quarter is up 118.42% in the last four weeks.

Valuation: The price to forward 12 months’ earnings (P/E) is 21.34X, which is below the median value of 21.63X over the past year. It’s also below the S&P 500’s 22.60X. So the shares are undervalued.

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RentACenter, Inc. (RCII) : Free Stock Analysis Report
 
Thor Industries, Inc. (THO) : Free Stock Analysis Report
 
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
 
The Scotts MiracleGro Company (SMG) : Free Stock Analysis Report
 
Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report
 
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