For Immediate Release
Chicago, IL – May 6, 2021 – Stocks in this week’s article are Encompass Health Corp.
EHC
, Facebook, Inc.
FB
, MKS Instruments, Inc.
MKSI
, The Blackstone Group Inc.
BX
and Interpublic Group of Companies Inc.
IPG
.
Robust Sales Growth Make These 5 Stocks Worth Betting On Now
Steady sales growth is the key to survival for businesses in today’s fast changing and highly competitive operating backdrop. Hence, solid revenues are necessary to drive growth, and there is a strong relationship between sales growth and the value of an enterprise.
Though a company might not be profitable over a particular time period, it usually generates revenues. Notably, in cases when companies tend to incur a loss on a temporary basis, they are valued based on revenues and not on the bottom line. This is because sales growth (or decline) is usually an early indicator of the company’s future earnings performance.
The Price-to-Sales (P/S) ratio takes into account a company’s revenues when valuing it and is key stock selection criteria keeping in mind that management usually has limited opportunities to fiddle with revenues as they can with earnings. Thus, the P/S ratio is subject to lower manipulation than the Price-to-Earnings ratio.
While sales growth is an important metric for any corporate for the purpose of growth projections and strategic decision-making, this alone doesn’t indicate much about a company’s prospects. Though it provides investors an insight into product demand and pricing power, a huge sales number does not necessarily convert into profits.
So, a consideration of a company’s cash position along with its sales number can be a more dependable strategy. Substantial cash in hand and a steady cash flow give a company more flexibility with respect to business decisions and further potential investments. Most importantly, an adequate cash position suggests that revenues are being channelized in the right direction.
For the rest of this Screen of the Week article please visit Zacks.com at:
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Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They’re virtually unknown to the general public. Yet today’s 220 Zacks Rank #1 “Strong Buys” were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year.
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