For Immediate Release
Chicago, IL – September 13, 2019 - Stocks in this week’s article are Columbia Sportswear Company COLM, Fossil Group Inc. FOSL, Alexion Pharmaceuticals Inc. ALXN, Eli Lilly and Company LLY and Shoe Carnival Inc. SCVL.
Use Rising P/E to Pick These 5 Winning Stocks
Trying hands at bargain stocks that have a low price-to-earnings (P/E) ratio is a common practice. The perception is that the lower the P/E, the higher will be the value of the stock. This inference is drawn on the simple logic that a stock’s current market price does not justify (is not equivalent to) its higher earnings and therefore has room to run.
But have you ever given it a thought that stocks with a rising P/E can also be worth buying. We’ll tell you why this often-overlooked approach may go a long way to cherry pick some solid stocks.
Why Rising P/E a Valuable Tool?
Investors should note that stock price moves in tandem with earnings performance. If earnings come in stronger, the price of a stock shoots up. Solid quarterly earnings and the forward guidance boost earnings forecasts, leading to stronger demand for the stock and an uptrend in its price.
So, if the price is rising steadily, it means that investors are assured of the stock’s fundamental strength and expect some strong positives out of it. Suppose an investor wants to buy a stock with a P/E ratio of 30, it means that he is willing to shell out $30 for only $1 worth of earnings. This is because the investor expects earnings of the company to rise at a faster pace in the future on the back of strong fundamentals.
Also, studies have revealed that stocks have seen their P/E ratios jump over 100% from their breakout point in the cycle. So, if you can pick stocks early in their breakout cycle, you can end up seeing considerable gains.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/514650/rising-pe-an-oftenignored-trick-to-pick-5-winning-stocks
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Eli Lilly and Company (LLY) : Free Stock Analysis Report
Alexion Pharmaceuticals, Inc. (ALXN) : Free Stock Analysis Report
Fossil Group, Inc. (FOSL) : Free Stock Analysis Report
Shoe Carnival, Inc. (SCVL) : Free Stock Analysis Report
Columbia Sportswear Company (COLM) : Free Stock Analysis Report
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