For Immediate Release
Chicago, IL – September 27, 2019 - Stocks in this week’s article are Columbia Sportswear Company COLM, American Woodmark Corp. AMWD, DICK'S Sporting Goods Inc. DKS, Alder BioPharmaceuticals Inc. ALDR and Leap Therapeutics Inc. LPTX.
Use Rising P/E Strategy to Grab 5 Winning Stocks
A common investing technique is to hunt for stocks with a low price-to-earnings (P/E) ratio. That’s because this basic measure of how much investors are spending for $1 worth of earnings speaks of undervaluation. The logic is simple – a stock’s current market price does not justify its higher earnings and therefore leaves room for upside.
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.
Power of Increasing P/E
The concept is that as earnings rise, so should the price of the stock. As forecasts for expected earnings come in higher, strong demand for the stock should continue to push up its prices. After all, a stock's P/E gives an indication of how much investors are ready to shell out per dollar of earnings.
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. Now if the P/E ratio becomes 35 within a short spell of time, it means that the person is ready to pay $35 for only $1 worth of earnings. It shows that the investor expects earnings of the company to rise at a faster pace in the future owing to strong fundamentals.
So, if the P/E of a stock is rising steadily, it means that investors are assured of its inherent strength and expect some strong positives out of it. 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/536581/use-rising-pe-strategy-to-grab-5-winning-stocks
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American Woodmark Corporation (AMWD) : Free Stock Analysis Report
Alder BioPharmaceuticals, Inc. (ALDR) : Free Stock Analysis Report
DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
Columbia Sportswear Company (COLM) : Free Stock Analysis Report
Leap Therapeutics, Inc. (LPTX) : Free Stock Analysis Report
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