The S&P 500 is expected to rise in 2025 due to Donald Trump’s growth plans, the Fed’s rate policies, and a strong U.S. economy. Thus, investors should seize the positive trend by placing bets on the S&P 500 stocks, such as Chipotle Mexican Grill, Inc. (CMG – Free Report) , ResMed Inc. (RMD – Free Report) and ServiceNow, Inc. (NOW – Free Report) since they exhibit superb earnings growth.
Earnings are considered the most important variable influencing the share price. After all, if the company doesn’t make money, it won’t survive. But, expectations of earnings also play a striking role.
Earnings Estimates & Share Price Movements
Frequently, we have seen a decline in the stock price despite earnings growth and a rally in price following an earnings decline. This is largely the result of a company’s earnings failing to meet market expectations.
Earnings estimates embody analysts’ opinions on factors such as sales growth, product demand, competitive industry environment, profit margins, and cost control. Thus, earnings estimates serve as a valuable tool, while making investment decisions. Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.
Thus, investors should watch for stocks ready to make a big move. Hence, investors need to buy stocks with historical earnings growth and are seeing a rise in quarterly and annual earnings estimates.
We use that basis to determine our stock selections using Zack’s Research Wizard Tool.
Screening Measures Using Research Wizard:
To shortlist stocks that have striking earnings growth and positive estimate revisions, we have added the following parameters:
Zacks Rank less than or equal to 2 (Only Zacks’ ‘Buys’ and ‘Strong Buys’ are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.)
5-Year Historical EPS Growth (%) greater than X-Industry (stocks with a strong EPS growth history).
% Change EPS F(0)/F(-1) greater than or equal to 5 (companies that saw year-over-year earnings growth of 5% or more in the last reported fiscal).
% Change Q1 Estimates over the last 4 weeks greater than zero (stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks).
% Change F1 Estimates over the last 1 week greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 1 week).
% Change F1 Estimates over the last 4 weeks greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 4 weeks).
The above criteria narrowed the universe of around 7,839 stocks to only 16. Here are the top three stocks:
Chipotle Mexican Grill
Chipotle Mexican Grill owns and operates Chipotle Mexican Grill restaurants. The company’s expected earnings growth rate for the current year is 23.3%. CMG currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ResMed
ResMed creates medical devices and software for healthcare markets. The company’s expected earnings growth rate for the current year is 21.2%. RMD currently has a Zacks Rank #2.
ServiceNow
ServiceNow offers intelligent workflow automation solutions for digital businesses. The company’s expected earnings growth rate for the current year is 28.7%. NOW currently has a Zacks Rank #1.
You can sign 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.
Click here to sign up for a free trial to the Research Wizard today.
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.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.
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