Chicago, IL – February 14, 2025 – Stocks in this week’s article are — Tyson Foods TSN, NetApp NTAP, NextEra Energy NEE, The Ensign Group ENSG and Central Garden & Pet CENT.
Investors often opt for the stock-picking approach that involves stocks with a low price-to-earnings (P/E) ratio. This strategy is based on the notion that the lower the P/E ratio is, the higher the stock value. The reasoning behind this is straightforward — when a stock's current market price does not adequately reflect its higher earnings, it suggests potential for growth.
But there is more to this whole P/E story. Because not only low P/E, stocks with a rising P/E can also fetch strong returns. In this regard, investors can bet on the likes of Tyson Foods,NetApp,NextEra Energy,The Ensign Group and Central Garden & Pet.
The concept is that as earnings rise, so should the price of the stock. As forecasts for expected earnings come in higher, strong demand for the stock should continue to push up its prices. After all, a stock's P/E gives an indication of how much investors are ready to shell out per dollar of earnings.
Suppose an investor wants to buy a stock with a P/E ratio of 30. This means that he is willing to shell out $30 for only $1 worth of earnings as he expects earnings of the company to rise at a faster pace in the future owing to strong fundamentals.
So, if the P/E of a stock is rising steadily, it means that investors are assured of its inherent strength and expect some strong positives out of it.
Also, studies have revealed that stocks have seen their P/E ratios jump over 100% from their breakout point in the cycle. So, if you can pick stocks early in their breakout cycle, you can end up seeing considerable gains.
In order to shortlist stocks that are exhibiting an increasing P/E, we chose the following as our primary screening parameters.
EPS growth estimate for the current year is greater than or equal to last year’s actual growth
Percentage change in last year EPS should be greater than or equal zero
Just these few criteria narrowed down the universe from over 7,700 stocks to just 49.
Here are five out of the 49 stocks:
Tyson Foods: The Zacks Rank #2 company is the biggest U.S. chicken company that produces, distributes and markets chicken, beef, pork as well as prepared foods. You can see the complete list of today’s Zacks #1 Rank stocks here.
The average four-quarter earnings surprise of TSN is 51.95%.
NetApp: The Zacks Rank #2 company provides enterprise storage as well as data management software and hardware products and services.
The average four-quarter earnings surprise of NTAP is 6.53%.
NextEra Energy: The Zacks Rank #2 company is a public utility holding company engaged in the generation, transmission, distribution and sale of electric energy.
The average four-quarter earnings surprise of NEE is 6.50%.
The Ensign Group: The Zacks Rank #2 company provides healthcare services in the post-acute care continuum, urgent care center and mobile ancillary businesses in the United States.
The average four-quarter earnings surprise of ENSG is 1.48%.
Central Garden & Pet: The Zacks Rank #1 company is looking forward to strengthening its position as one of the leading companies in the U.S. pet supplies, and lawn and garden supplies space.
The average four-quarter earnings surprise of CENT is 208.72%.
You can get the rest of the stocks on this list by signing 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.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2415129/bet-on-5-top-ranked-stocks-with-rising-pe
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NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
NetApp, Inc. (NTAP) : Free Stock Analysis Report
Central Garden & Pet Company (CENT) : Free Stock Analysis Report
Tyson Foods, Inc. (TSN) : Free Stock Analysis Report
The Ensign Group, Inc. (ENSG) : Free Stock Analysis Report
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