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A Trio of Stocks Growing Earnings Faster than Sales

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- By Alberto Abaterusso

Investors could be interested in the following stocks, as they are growing earnings faster than sales, which may indicate efficient operating activities as profit margins increase with growth.

The below companies have five-year revenue growth rates of no less than 5% per year and five-year net income growth rates of no less than 10% per year.


The Home Depot Inc

The first stock value investors could be interested in is The Home Depot Inc (NYSE:HD), an Atlanta-based operator of home improvement retail stores in North America and Mexico.

The company saw its trailing 12-month revenue increase by 7.5% and its trailing 12-month net income increase by 13.2% (on average) per annum over the last five years.

A Trio of Stocks Growing Earnings Faster than Sales
A Trio of Stocks Growing Earnings Faster than Sales

The stock traded at around $316.75 per share at close on Tuesday for a market cap of $340.58 billion and a 52-week range of $234.31 to $345.69. Currently, The Home Depot pays quarterly dividends, with the last distribution, $1.65 per common share, issued on March 11 for a dividend yield of 2.08% as of May 18.

GuruFocus assigned a financial strength rating of 5 out of 10 and a profitability rating of 9 out of 10 to the company.

Wall Street sell-side analysts recommend a median recommendation rating of overweight for this stock and have established an average target price of $345.18 per share.

KLA Corp

The second stock investors could be interested in is KLA Corp (NASDAQ:KLAC), a Milpitas, California-based company that provides semiconductor and nanoelectronics companies with process control and yield management solutions.

The company saw its trailing 12-month revenue increase by 15.5% and its trailing 12-month net income increase by 23.5% (on average) per annum over the last five years.

A Trio of Stocks Growing Earnings Faster than Sales
A Trio of Stocks Growing Earnings Faster than Sales

The stock was trading at around $293.92 per share at close on Tuesday for a market cap of $45.05 billion and a 52-week range of $168.24 to $359.69. Currently, the company pays a 91 cents per common share quarterly cash dividend with the next one scheduled for June 1. The scheduled payment leads to a forward dividend yield of 1.24% as of May 18.

GuruFocus assigned a score of 6 out of 10 to the company's financial strength rating and of 9 out of 10 to its profitability rating.

Wall Street sell-side analysts recommend a median rating of overweight for this stock and have established an average target price of $369.24 per share.

IHS Markit Ltd

The third stock value investors could be interested in is IHS Markit Ltd (NYSE:INFO), a London, United Kingdom-based provider of various industries and markets around the world with critical information and analytics.

The company saw its trailing 12-month revenue increase by 15.1% and its trailing 12-month net income increase by 34.1% (on average) every year over the last five years.


A Trio of Stocks Growing Earnings Faster than Sales
A Trio of Stocks Growing Earnings Faster than Sales

The stock traded at around $102.48 per share at close on Tuesday for a market capitalization of $43.43 billion and a 52-week range of $66.09 to $109.34. IHS Markit Ltd is currently paying quarterly dividends to the shareholders, with the most recent one, 20 cents per common share, made on May 17, for a dividend yield of 0.78% as of May 18.

GuruFocus assigned the company a score of 5 out of 10 for its financial strength rating and 8 out of 10 for the profitability rating.

Wall Street sell-side analysts recommend a median rating of overweight for this stock and have established an average target price of $117.63 per share.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.