Yahoo Finance GuruScreens - upgrades and downgrades - December 2nd
Economic uncertainty in recent years has focused the attention of investors on stocks with earnings growth and quality. Those companies that can shake off economic malaise and prosper during otherwise uncertain times ought to be in a better position to offer that sort of confidence to investors. A great investing screen for finding these types of stocks is the William O'Neil screen - which disregards price in favour of strong signs of explosive earnings and an upward trend in share price.
Avon Rubber
This time last year, many pundits were expecting the FTSE 100 to rise above the 7000 mark. The 'footsie' has so far failed to reach these lofty heights, partly because of geopolitical tensions around the world. However, Avon Rubber - a producer of high-tech rubber gas masks - has benefited from political tensions.
In a recent interview, Avon's chief executive said that the “phone rings every time there's a world event. Be it Syria, Crimea, the World Cup or Olympics." Most recently, demand from South America has been driven by protests around the time of world cup in Brazil. The firm also has a steady stream of revenues flowing from a contract with the Pentagon to supply around 200,000 masks a year.
This has helped earnings per share grow each year since 2010. The company has also beaten the market by 7% over the last month and 26% over the last year. Then, on 26th November, Avon Rubber entered the William O'Neil screen, which aims to finds stocks with fast earnings growth and share price momentum. The firm qualifies for five GuruScreens in total.
S&U
Another company that recently qualified for the William O'Neil screen is S&U, which is engaged in the provision of consumer credit and motor finance. Over the last twelve months, S&U has generated £1.30 in earnings per share (eps). This is more than double the EPS figures for 2011 (60p). Sales and profits have grown through the recession as big banks retreated from the mainstream credit market, to the advantage of sub-prime lenders like S&U. Demand for credit was driven further as the economy started to pick up in more recent years.
This growth has helped to drive the share price up. Over the last year, S&U has beaten the market by 30% and the firm now trades within 8% of its 52 week high. The brokers are also becoming more optimistic about S&U's growth prospects. Since December 2013, EPS estimates have risen from £1.16 to £1.49 - a 28% increase! This combination of share price momentum and broker upgrades gives S&U an overall Momentum Rank of 93. However, the company has a P/E ratio of just 15, compared to the FTSE 100 average of 17.
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