Best stocks to invest in
Finding companies with the criteria you want isn’t always easy. You could spend hours searching ticker after ticker, only to find companies which aren’t worthy of your hard earned cash. An easier way to navigate through this is by using high quality stock screeners. Screening helps investors narrow down companies to invest in based on their ability to meet every criteria selected. Any company who misses even one of the criteria requirements will be filtered out.
This lets one easily choose ideal metrics. Screens are effective because they sift out bad stocks and only keep the cream of the crop in. It isn’t always easy to create an effective screen. Our Zacks Premium Screens have helped with this, bringing profits to many investors over time. Our predefined criteria are chosen carefully to capture special kinds of companies.
Today, we’ve dug up three mid cap stocks using one of our premium screens known as “Mid-Sized Stocks for Outsized Returns”. Some of the metrics of this screen is that the stock must have an average trading volume of at least 100,000 shares over the last 20 days, an annual EPS growth rate of at least 10% over the last five years, and expected earnings growth north of 10% this year. In addition to using the metrics on this great screen, I’ve added an additional metric which I feel is appropriate for investing in these stocks
I screened for stocks with a Zacks Industry Rank of 75 or better. Stocks within the top half of the 265 different industries covered by Zacks outperform stocks from the bottom half by a factor of two to one, so it makes sense to screen for stocks from the upper echelon of all industries. Let’s see what our modified premium screen has found for us today.
Abiomed manufactures and sells medical products that assist or replace the pumping function in failing hearts. ABMD is a Zacks Rank #1 (Strong Buy) and is also pretty liquid, as it has a current ratio of 7.48. The company’s EPS is projected to grow by 24.34% this year.
The company’s sales are projected to grow by 41.5% this year, which is great because ABMD also enjoys a high net margin of 41.57%. When a company is profitable and sees sales growth at the same time, it can give investors a superior ROE. Abiomed’s earnings are projected to grow by 24.34% this year.
Over the last 60 days, six analysts revised their earnings estimates for this quarter. Five of those estimates were revised upwards, and only one negative revision was made. ABMD has a good track record of beating our earnings. The company has beaten our EPS consensus in each of the last four quarters. Across those quarters, Abiomed posted an average beat of 89.46% per quarter.
American Woodmark Corporation-AMWD
American Woodmark manufactures kitchen cabinets and vanities for new homes under construction and homes being remodeled. Like Abiomed, AMWD is a Zacks Rank #1 (Strong Buy).
The company is superior to its industry across a few notable growth metrics. American Woodmark has a net margin of 6.21%, which is significantly better than the industry’s average net margin of 4.74%. Woodmark’s revenues are projected to grow by 13.48% this year, which is must faster than the industry’s sales growth expectations of only 3.9%. With higher profit margins and sales growth, AMWD looks like it has a distinct advantage over the rest of the industry.
American Woodmark has received three positive earnings estimate revisions from analysts over the last 60 days for the current quarter. Over the same time frame, there have been no negative estimate revisions. AMWD has beaten our EPS consensus by an average of 38.41% per quarter over the last four quarters.
Sprouts Farmers Markets-SFM
Sprouts Farmers Markets sells natural and organic food. The budding Whole Foods WFM competitor offers a wide range of products such as meat, cheese, wine, and vitamins. Sprouts is a Zacks Rank #2 (Buy) and has a beta of just 0.79. Expect less volatility than the broader market if you choose to buy SFM stock.
Sprouts’ EPS is projected to grow by 13.18% this year. It’s worth noting that the company has a trailing twelve month ROE of 17.04%, which is way ahead of the industry’s average ROE of 12.91%. The company’s projected sales growth of 16.9% is also superior to the industry, whose revenues are projected to grow by only 2.54%. SFM has met or beaten our EPS consensus estimate in three of the last four quarters.
Investing in a great industry is one thing. Investing in a superior company in a great industry is another thing entirely. Starting broad is good, but you really want to narrow in on the investment candidates who look primed to outperform the rest of the industry. One magical screening ingredient which can’t be overlooked is the Zacks Rank #1 (Strong Buy). The rank helps to find companies which look like dependable earnings candidates. The Zacks Premium Screens gives you access to “Mid-Sized Stocks for Outsized Returns” and 45 other premium screens designed to give you superior investment returns.
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AMER WOODMARK (AMWD): Free Stock Analysis Report
ABIOMED INC (ABMD): Free Stock Analysis Report
SPROUTS FMR MKT (SFM): Free Stock Analysis Report
WHOLE FOODS MKT (WFM): Free Stock Analysis Report
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