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Top 5 Sales Growth Stocks Worth Adding to Your Portfolio

SSteady growth in sales is the key to the survival of any business. Sales growth not only provides insight into product demand and pricing power, but is also vital for growth projections and strategic decision making.

Yet investors often fail to view sales growth as a reliable metric for choosing profitable stocks. This may be due to the preconceived notion among investors that a company’s stock price is generally sensitive to its earnings dynamics.

Nevertheless, one should look for a strong relationship between the levels of sales growth and the value of a business. This is because in cases where companies experience a loss, even briefly, they are valued based on their income and not on profits, as the growth (or decline) in turnover is usually an indicator of future performance. ‘a company.

It is also important to ensure that the sales figures are not only increasing, but also registering year-over-year growth. Thus, the price / sales ratio (P / S) may prove to be an appropriate measure for the valuation of stocks. The importance of this measure lies in the fact that management has limited possibilities to manipulate income, while profits do not.

However, a huge number of sales don’t necessarily translate into profits. Therefore, taking into account a company’s cash position as well as its turnover can prove to be a more reliable strategy. Substantial liquidity and a stable cash flow give a company more flexibility when it comes to business decisions and investments.

Choose the winning actions

In order to shortlist stocks with impressive sales growth and high cash balance, we selected Historical sales growth over 5 years (%) higher than that of X-Industry and Cash flow of over $ 500 million as our main screening parameters.

But sales growth and cash flow strength are not the absolute criteria for stock picking. Therefore, we added some other factors to come up with a winning strategy.

P / S ratio lower than X-Industry: This metric determines the value attributed to each dollar of a company’s revenue. The lower the ratio, the better it is to choose a stock since the investor pays less for each unit of sale.

% change in revisions to F1 sales estimates (four weeks) greater than X-Industry: Revisions to estimates, better than those of the industry, are often seen as a trigger for a rise in stock prices.

Operating margin (average of the last five years) greater than 5%: The operating margin measures how much every dollar of a company’s turnover translates into profits. A high ratio indicates that the business has good cost control and that sales are growing faster than costs – an optimal situation.

Return on equity (ROE) greater than 5%: This will ensure that sales growth translates into profits and that the business does not accumulate cash. A high ROE means the business is spending wisely and is likely profitable.

Rank of Zacks less than or equal to 2: Zacks Rank # 1 (Strong Buy) or 2 (Buy) stocks are known to outperform regardless of the market environment. You can see The full list of today’s Zacks # 1 Rank stocks here.

Here are five of the 22 actions that qualified the screening:

Based in Clayton, MO, Olin Company OLN is a vertically integrated global producer and distributor of chemicals and a US munitions manufacturer. Its expected sales growth rate for 2021 is 46.2%. The stock currently carries a Zacks Rank # 2.

Based in San Francisco, salesforce.com CRM is the leading provider of on-demand customer relationship management software. The company’s expected sales growth rate for fiscal 2022 is 23.7%. He currently wears a Zacks Rank # 2.

Comstock Resources, Inc. CRK is engaged in the acquisition, exploration, development and production of petroleum and natural gas. Sales of the Frisco, Texas-based company are expected to increase at a rate of 61.8% for 2021. The stock currently carries a Zacks Rank # 2.

Wyomissing, PA-headquarters, Games and Recreation Properties, Inc. GLPI is dedicated to the acquisition, financing and possession of real estate intended to be leased to gaming operators under triple net leases. Its expected sales growth rate for 2021 is 3.2%. The stock currently carries a Zacks Rank # 2.

Based in New Britain, CT, Stanley Black & Decker, Inc. SWK manufactures and supplies tools (power and hand tools) and related accessories, healthcare solutions, electronic security solutions, technical fastening systems and many other items and services. Its expected sales growth rate for 2021 is 19.4%. The stock currently carries a Zacks Rank # 2.

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Disclosure: Officers, directors and / or employees of Zacks Investment Research may own or have sold securities short and / or hold long and / or short positions in options mentioned in this document. An affiliated investment advisory firm may own or have sold securities short and / or hold long and / or short positions in options mentioned in this document.

Disclosure: Information on the performance of Zacks’ portfolios and strategies can be found at: https://www.zacks.com/performance

5 actions in the process of doubling

Each has been handpicked by a Zacks expert as the # 1 favorite stock to earn + 100% or more in 2021. Previous recommendations have climbed + 143.0%, + 175.9%, +498 , 3% and + 673.0%.

Most of the stock in this report is flying under Wall Street’s radar, which provides a great opportunity to get into the ground floor.

Today, discover these 5 potential circuits >>

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salesforce.com, inc. (CRM): Free stock analysis report

Comstock Resources, Inc. (CRK): Get a Free Report

Stanley Black & Decker, Inc. (SWK): Free Stock Analysis Report

Olin Corporation (OLN): Free Stock Analysis Report

Gaming and Leisure Properties, Inc. (GLPI): Free Stock Analysis Report

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