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Buy These 5 Stocks With Remarkable Earnings Growth

DG vs. TJX: Which Stock Is the Better Value Option?

Earnings growth enthralls almost everyone, right from the top brass to research analysts. But the question here is why? This is simply because earnings are a measure of the money a company is making. Take a company’s revenues over a given period of time, subtract the cost of production and you will have its earnings!

This metric is also considered the most noteworthy variable in influencing share price. But expectations of earnings also play a significant role in influencing the price of a stock.

Earnings Estimates Determine Share Price

We have often seen a decline in the stock price despite earnings growth and a rally in the price following an earnings decline. This is largely a result of a company’s earnings failing to meet market expectations.

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Earnings estimates embody analysts’ opinion on factors such as sales growth, product demand, competitive industry environment, profit margins and cost control. Thus, earnings estimates serve as a valuable tool while making investment decisions. Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.

Investors, thus, should be on the lookout for stocks that are ready to make a big move. Hence, it is important to buy stocks that have historical earnings growth and are also seeing a rise in quarterly and annual earnings estimates.

Screening Parameters:

In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we have added the following parameters:

Zacks Rank less than or equal to 2 (Only Zacks Rank Buy and Strong Buy are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.)

5-Year Historical EPS Growth (%) greater than X-Industry (stocks with a strong EPS growth history).

% Change EPS F(0)/F(-1) greater than or equal to 5 (companies that saw year-over-year earnings growth of 5% or more in the last reported fiscal).

% Change Q1 Estimates over the last 4 weeks greater than zero (stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks).

% Change F1 Estimates over the last 1 week greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 1 week).

% Change F1 Estimates over the last 4 weeks greater than zero (stocks that have seen their annual earnings estimates being revised higher in the last 4 weeks).

The above criteria narrowed down the universe of around 7,839 stocks to only 14. Here are the top five stocks:

The Estée Lauder Companies Inc. EL manufactures and markets skin care, makeup, fragrance and hair care products worldwide. The company has a Zacks Rank #2 (Buy). The company’s estimated growth rate for this year is 25.7%, higher than the industry’s gain of 11.3%.

Meritor, Inc. MTOR designs, develops, manufactures, markets, distributes, sells, services, and supports integrated systems. The company has a Zacks Rank #2. Its estimated growth rate for this year is 44.2%, higher than the industry’s gain of 13.1%.

Alarm.com Holdings, Inc. ALRM provides cloud-based software platform solutions for smart residential and commercial properties in the United States and internationally. The company’s estimated growth rate for this year is 22.8%, higher than the industry’s gain of 15.4%. It carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Concho Resources Inc. CXO is an independent oil and natural gas company that engages in the acquisition, development and exploration of oil and natural gas properties in the United States. The company has a Zacks Rank #1 (Strong Buy). The company’s estimated growth rate for this year is 81.3%, higher than the industry’s gain of 25.4%.

First Financial Bancorp. FFBC operates as the bank holding company for First Financial Bank that provides commercial banking and other banking, and banking-related services to individuals and businesses in Ohio, Indiana and Kentucky. The company has a Zacks Rank #2. The company’s estimated growth rate for this year is 31.1%, higher than the industry’s gain of 26.8%.

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.

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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

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Meritor, Inc. (MTOR) : Free Stock Analysis Report
 
First Financial Bancorp. (FFBC) : Free Stock Analysis Report
 
The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
 
Concho Resources Inc. (CXO) : Free Stock Analysis Report
 
Alarm.com Holdings, Inc. (ALRM) : Free Stock Analysis Report
 
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