What are we looking for?
Growth factor investing is a strategy that investors use to find companies with strong potential for big growth. Unlike traditional value investing, which focuses on undervalued mature companies with solid fundamentals, growth investing hones in on enterprises that are poised to experience above-average expansion in their earnings, revenues and market value.
The screen
We used Trading Central’s Strategy Builder to search for U.S. stocks that are growing strongly by using Trading Central’s growth factor rating.
We began by instituting a minimum market capitalization of US$5-billion. This concentrates our focus on mid- to large-cap stocks, steering clear of smaller, potentially more volatile ones.
Next, we screened for stocks with a price/earnings ratio below the average for the S&P 500 Index, which is now 20.42.
Finally, we added a filter to search for U.S. stocks with a high growth factor rating, which is derived from Trading Central’s Quantamental Rating. The growth factor takes into account the year-over-year change in price/earnings ratios, as well as growth in earnings per share (EPS) and revenue.
For informational purposes in our table, we also include the recent stock price, dividend yield and one-year price return.
More about Trading Central
Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener, is available through leading retail brokers in Canada and around the world.
What we found
Topping our list is Delta Air Lines Inc. DAL-N The company has posted remarkable price gains of 32.7 per cent over one year and 37 per cent year to date, which stand out at the forefront of our ranking. With a robust Trading Central growth factor rating of 81 out of 100, Delta demonstrates impressive strength. One factor that affected the rating was the company’s EPS growth of 146.9 per cent in its most recent quarter compared to the same quarter a year earlier.
Albermarle Corp. ALB-N, a worldwide producer and distributor of advanced specialty chemicals, has the top Trading Central growth factor rating in our compilation, reaching an impressive 97 out of 100. This is due to Abermarle’s robust growth in quarterly EPS and revenue, which surged by 388 per cent and 128.8 per cent, respectively, compared with the same quarter the previous year.
Agnico Eagle Mines Ltd. AEM-N, a mining company based in Canada, also secures a place on our list with an impressive Trading Central growth factor rating of 91 out of 100. Notably, the company has a fairly low price/earnings ratio of 9.71 and a commendable dividend yield of 3.3 per cent.
The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of investment in financial instruments. Investors should conduct further research before investing.
Gary Christie is head of North American research at Trading Central in Ottawa.
A summer shopping list for North American distribution and retail stocks
Gary Christie