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5 Top Stocks to Buy for Superb Earnings Growth in 2024
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As we head into the presidential election year, geopolitical issues and stretched valuations may create gyrations in the stock market. On the other hand, the possibility of multiple interest cuts might help the economy stay afloat. So, whatever the outcome of the stock market in 2024, from an investment standpoint, investing in companies exhibiting solid earnings growth should be the highest priority. This is because if the company doesn’t make money, it won’t last long.
So, what is earnings growth? Study a company’s revenues over a given period, subtract the production cost, and you have earnings. By the way, this is also considered the most important variable influencing share price. But, expectations of earnings play a noteworthy role.
Earnings Estimates & Share Price Movements
Frequently, we have seen a decline in the stock price despite earnings growth and a rally in price following an earnings decline. This is largely the result of a company’s earnings failing to meet market expectations.
Earnings estimates embody analysts’ opinions 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.
Thus, investors should look for stocks ready to make a big move. Hence, investors need to buy stocks with historical earnings growth and are seeing a rise in quarterly and annual earnings estimates.
Screening Measures:
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' 'Buys' and 'Strong Buys' 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 revised higher in the last 4 weeks).
The above criteria narrowed the universe of around 7,839 stocks to only six. Here are the top five stocks that stand out:
Beacon Roofing Supply (BECN - Free Report) is the largest publicly traded distributor of residential and non-residential roofing materials and complementary building products in the United States and Canada. BECN’s expected earnings growth rate for the next year is 7.1%. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Deckers Outdoor (DECK - Free Report) is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. DECK’s expected earnings growth rate for next year is 13.2%. The company currently has a Zacks Rank #1.
A. O. Smith (AOS - Free Report) is one of the leading manufacturers of commercial and residential water heating equipment and water treatment products in the world. AOS’ expected earnings growth rate for next year is 5.8%. The company carries a Zacks Rank #2 (Buy) at present.
Assurant (AIZ - Free Report) is a global provider of risk management solutions in the housing and lifestyle markets. The company has a Zacks Rank #1. AIZ’s expected earnings growth rate for next year is 4.2%.
Tradeweb Markets (TW - Free Report) is an operator of electronic marketplaces for the trading of products across the rates, credit, money markets, and equities asset classes. The company has a Zacks Rank #1. TW’s expected earnings growth rate for next year is 16.4%.
You can sign 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.
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.
Image: Bigstock
5 Top Stocks to Buy for Superb Earnings Growth in 2024
As we head into the presidential election year, geopolitical issues and stretched valuations may create gyrations in the stock market. On the other hand, the possibility of multiple interest cuts might help the economy stay afloat. So, whatever the outcome of the stock market in 2024, from an investment standpoint, investing in companies exhibiting solid earnings growth should be the highest priority. This is because if the company doesn’t make money, it won’t last long.
So, what is earnings growth? Study a company’s revenues over a given period, subtract the production cost, and you have earnings. By the way, this is also considered the most important variable influencing share price. But, expectations of earnings play a noteworthy role.
Earnings Estimates & Share Price Movements
Frequently, we have seen a decline in the stock price despite earnings growth and a rally in price following an earnings decline. This is largely the result of a company’s earnings failing to meet market expectations.
Earnings estimates embody analysts’ opinions 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.
Thus, investors should look for stocks ready to make a big move. Hence, investors need to buy stocks with historical earnings growth and are seeing a rise in quarterly and annual earnings estimates.
Screening Measures:
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' 'Buys' and 'Strong Buys' 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 revised higher in the last 4 weeks).
The above criteria narrowed the universe of around 7,839 stocks to only six. Here are the top five stocks that stand out:
Beacon Roofing Supply (BECN - Free Report) is the largest publicly traded distributor of residential and non-residential roofing materials and complementary building products in the United States and Canada. BECN’s expected earnings growth rate for the next year is 7.1%. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Deckers Outdoor (DECK - Free Report) is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. DECK’s expected earnings growth rate for next year is 13.2%. The company currently has a Zacks Rank #1.
A. O. Smith (AOS - Free Report) is one of the leading manufacturers of commercial and residential water heating equipment and water treatment products in the world. AOS’ expected earnings growth rate for next year is 5.8%. The company carries a Zacks Rank #2 (Buy) at present.
Assurant (AIZ - Free Report) is a global provider of risk management solutions in the housing and lifestyle markets. The company has a Zacks Rank #1. AIZ’s expected earnings growth rate for next year is 4.2%.
Tradeweb Markets (TW - Free Report) is an operator of electronic marketplaces for the trading of products across the rates, credit, money markets, and equities asset classes. The company has a Zacks Rank #1. TW’s expected earnings growth rate for next year is 16.4%.
You can sign 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