For Immediate Release
Chicago, IL – July 29, 2016 - Stocks in this week’s article include: Randgold Resources Ltd. (GOLD), Acuity Brands, Inc. (AYI), Cheniere Energy, Inc. (LNG), Murphy Oil Corporation ( MUR) and LATAM Airlines Group SA (LFL).
Screen of the Week of Zacks Investment Research:
Buy These 5 Stocks with Solid Earnings Acceleration
As we are in the thick of the second-quarter earnings season, investors are on the lookout for stocks that are ready to make a significant jump. Generally, better-than-expected earnings growth leads to an upsurge in the share price. But why is this so? This is because earnings serve as the indicator of a company’s profitability. Take a company’s revenue over a given period of time, subtract the cost of production and, there it is, you have earnings!
In addition to actual earnings, here is another metric called earnings acceleration, which works even better in lifting the stock price. Studies have shown that the majority of successful stocks had seen acceleration in earnings before their positive price moves. So, what exactly is earnings acceleration?
Recognizing Future Outperformers
Earnings acceleration is basically incrementally growing earnings per share (EPS) of a company. Or, in other words, it is the increase in a company’s quarter-over-quarter earnings growth within a stipulated frame of time.
As earnings acceleration considers both direction and magnitude of growth rates, it helps one to spot stocks that haven’t caught the attention of the investors yet, which once secured will invariably lead to an uptick in the share price. But, if you pick a stock just on the basis of earnings growth then you are paying for something that has already been reflected in the stock price.
Increasing percentage of earnings growth means that the company is fundamentally sound and has been on the right track for a considerable period of time. On the other hand, sideways percentage of earnings growth can potentially signal a period of consolidation or slowdown, while a decelerating percentage of earnings growth may at times send prices down.
Hence, earnings acceleration should be viewed as a key metric for share price outperformance.
Screening Parameters :
Let’s look for stocks for which the last two quarter-over-quarter percentage EPS growth rates are more than the growth rates of the previous periods. The projected quarter-over-quarter percentage EPS growth rate is also expected to be higher than the previous periods’ growth rates.
EPS % Projected Growth (Q1)/(Q0) greater than EPS % Growth (Q0)/(Q-1): The projected growth rate for the current quarter (Q1) over the completed quarter (Q0) has to be greater than the growth rate from the completed quarter (Q0) over one quarter ago (Q-1).
EPS % Growth (Q0)/(Q-1) greater than EPS % Growth (Q-1)/(Q-2): The growth rate for the completed quarter (Q0) over one quarter ago (Q-1) has to be greater than the growth rate from one quarter ago (Q-1) over two quarters ago (Q-2).
EPS % Growth (Q-1)/(Q-2) greater than EPS % Growth (Q-2)/(Q-3): The growth rate from one quarter ago (Q-1) over two quarters ago (Q-2) has to be greater than the growth rate from two quarters ago (Q-2) over three quarters ago (Q-3).
In addition to this, we have added:
Current Price greater than or equal to $5 : This screens out the low priced stocks.
Average 20-day volume greater than or equal to 50,000: High trading volume implies that the stocks have adequate liquidity.
The above criteria narrowed down the universe of about 7,734 stocks to only 19. Here are the top five stocks:
Randgold Resources Ltd. (GOLD) is engaged in the gold mining, exploration and related activities. The company’s estimated earnings growth rate for this year is 60%.
Acuity Brands, Inc. (AYI) comprises Acuity Lighting Group and Acuity Specialty Products. Acuity Brands is a provider of lighting solutions for commercial, institutional, industrial, infrastructure, and residential applications throughout North America and select international markets. The company’s estimated earnings growth rate for this year is 41%.
Cheniere Energy, Inc. (LNG) is an energy company primarily engaged in liquefied natural gas (LNG)-related businesses. The company’s estimated earnings growth rate for this year is 53%.
Murphy Oil Corporation (MUR) is an oil and gas exploration and production company. The company’s estimated earnings growth rate for this year is 55.6%.
LATAM Airlines Group SA (LFL) offers domestic and international passenger and cargo air services. The company’s estimated earnings growth rate for this year is more than 100%.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today .
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
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don’t wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/performance
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer .
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
RANDGOLD RSRCS (GOLD): Free Stock Analysis Report
ACUITY BRANDS (AYI): Free Stock Analysis Report
CHENIERE ENERGY (LNG): Free Stock Analysis Report
MURPHY OIL (MUR): Free Stock Analysis Report
LATAM AIRLINES (LFL): Free Stock Analysis Report
To read this article on Zacks.com click here.
