Australia markets open in 3 hours 57 minutes
  • ALL ORDS

    6,696.50
    +29.00 (+0.43%)
     
  • AUD/USD

    0.6430
    -0.0028 (-0.43%)
     
  • ASX 200

    6,496.20
    +26.80 (+0.41%)
     
  • OIL

    78.52
    +1.81 (+2.36%)
     
  • GOLD

    1,635.70
    +2.30 (+0.14%)
     
  • BTC-AUD

    29,691.10
    -345.66 (-1.15%)
     
  • CMC Crypto 200

    438.30
    -20.84 (-4.54%)
     

Is Camden (CPT) a Solid Growth Stock? 3 Reasons to Think " Yes "

·3-min read

Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all.

In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.

However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks.

Camden (CPT) is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank.

Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).

While there are numerous reasons why the stock of this real estate investment trust is a great growth pick right now, we have highlighted three of the most important factors below:

Earnings Growth

Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for Camden is 3.5%, investors should actually focus on the projected growth. The company's EPS is expected to grow 20.6% this year, crushing the industry average, which calls for EPS growth of 12.6%.

Impressive Asset Utilization Ratio

Growth investors often overlook asset utilization ratio, also known as sales-to-total-assets (S/TA) ratio, but it is an important feature of a real growth stock. This metric shows how efficiently a firm is utilizing its assets to generate sales.

Right now, Camden has an S/TA ratio of 0.15, which means that the company gets $0.15 in sales for each dollar in assets. Comparing this to the industry average of 0.12, it can be said that the company is more efficient.

While the level of efficiency in generating sales matters a lot, so does the sales growth of a company. And Camden looks attractive from a sales growth perspective as well. The company's sales are expected to grow 16.7% this year versus the industry average of 10.4%.

Promising Earnings Estimate Revisions

Beyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The current-year earnings estimates for Camden have been revising upward. The Zacks Consensus Estimate for the current year has surged 0.7% over the past month.

Bottom Line

Camden has not only earned a Growth Score of B based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination indicates that Camden is a potential outperformer and a solid choice for growth investors.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Camden Property Trust (CPT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research