Growth investors are constantly on the lookout for stocks that exhibit above-average financial growth, as this characteristic tends to attract market attention and deliver robust returns. However, identifying an exceptional growth stock is no easy feat, given the inherent risk and volatility associated with such investments. Betting on a stock where the growth story has already peaked or is nearing its end can lead to significant losses.
Nonetheless, identifying cutting-edge growth stocks is made more accessible with the assistance of the Zacks Growth Style Score. This metric transcends traditional growth attributes to assess a company’s genuine growth prospects, and JPMorgan Chase & Co. (NYSE:JPM) stands out as one of the stocks recommended by our proprietary system. In addition to its favorable Growth Score, it holds a top Zacks Rank.
Research has consistently shown that stocks boasting strong growth attributes tend to outperform the market.
Here are three compelling factors that make JPMorgan Chase & Co. a particularly enticing growth opportunity right now:
Earnings Growth
Earnings growth is arguably the most critical factor, as stocks with substantial profit growth tend to capture the attention of investors seeking growth opportunities. For growth investors, double-digit earnings growth is especially desirable, often signaling strong prospects and potential stock price gains. While JPMorgan Chase & Co. has a historical EPS growth rate of 13.4%, the focus should be on the projected growth. The company is expected to achieve a remarkable 33.1% EPS growth this year, surpassing the industry average, which forecasts a -3.6% EPS growth.
Impressive Asset Utilization Ratio
The asset utilization ratio, often overlooked by investors, plays a crucial role in growth investing. This metric demonstrates how efficiently a company is using its assets to generate sales. Currently, JPMorgan Chase & Co. boasts an S/TA ratio of 0.06, indicating that the company generates $0.06 in sales for every dollar in assets. When compared to the industry average of 0.05, it’s evident that the company is operating more efficiently. Furthermore, sales growth is also in favor of JPMorgan Chase & Co., with the company expected to achieve a 22.2% sales growth this year, outperforming the industry average of 4.1%.
Promising Earnings Estimate Revisions
The strength of a stock in terms of the aforementioned metrics can be further substantiated by analyzing trends in earnings estimate revisions, with a positive trend being favorable. Empirical research underscores the strong correlation between earnings estimate revisions and near-term stock price movements. Notably, the current-year earnings estimates for JPMorgan Chase & Co. have been consistently revised upwards, with the Zacks Consensus Estimate for the current year surging by 1.7% in the past month.
Conclusion
JPMorgan Chase & Co. not only attains a Growth Score of B based on several factors, as discussed above, but also holds a Zacks Rank #2 due to positive earnings estimate revisions. This combination points to JPMorgan Chase & Co.’s potential to outperform the market, establishing it as a robust choice for growth-focused investors.
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