For Immediate Release
Chicago, IL – May 5, 2023 – Stocks in this week’s article are Sweetgreen SG, Adaptimmune Therapeutics ADAP, Owl Rock Capital ORCC, MACOM Technology Solutions MTSI and Equity Commonwealth EQC.
Forget Bargain Hunting: Buy These 5 Stocks with Rising P/E
Investors commonly employ the strategy of seeking out stocks with a low price-to-earnings (P/E) ratio. The rationale behind this strategy is the belief that a lower P/E ratio correlates with a higher stock value. The logic is simple — a stock’s current market price does not justify its higher earnings and therefore leaves room for upside.
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 the stocks listed below.
Rising P/E: A Useful Tool
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, astock'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.
Here are five out of the 74 stocks:
Sweetgreen: The Zacks Rank #2 company manages a chain of salad restaurants. You can see the complete list of today’s Zacks #1 Rank stocks here.
The average earnings surprise of SG for the past four quarters is 0.34%.
Adaptimmune Therapeutics: The Zacks Rank #2 company is a biopharmaceutical company.
The average earnings surprise of ADAP for the past four quarters is 4.80%.
Owl Rock Capital: This Zacks Rank #2 company is a specialty finance company that lends funds to the U.S. middle market companies. Owl Rock Capital Partners and units are based in New York as a direct lending platform.
The average earnings surprise of ORCC for the past four quarters is 2.12%.
MACOM Technology Solutions: MACOM Technology Solutions Holdings, Inc. is a provider of power analog semiconductor solutions to varied markets. The company has a Zacks Rank #2.
The average earnings surprise of MTSI for the past four quarters is 2.79%.
Equity Commonwealth: Equity Commonwealth is an internally managed and self-advised real estate investment trust. The company has a Zacks Rank #2.
The average earnings surprise of EQC for the past four quarters is 173.85%.
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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/2089728/forget-bargain-hunting-buy-5-stocks-with-rising-pe
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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