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gOnline investors focus on stocks that experience above-average financial growth because this characteristic helps those stocks grab market attention and generate solid returns. But finding good growth stock isn’t easy at all.
By their very nature, these stocks present above-average risk and volatility. Additionally, if a business’s growth story is over or coming to an end, betting on it could result in a significant loss.
However, it is quite easy to find top growth stocks using the Zacks Growth Style Score (which is part of the Zacks’ style scores system), which goes beyond traditional growth attributes to analyze a company’s actual growth prospects.
The Joint Corp. (JYNT) is on the list of such actions currently recommended by our proprietary system. In addition to a favorable growth score, he holds a higher Zacks rank.
Research shows that stocks with the best growth characteristics consistently beat the market. And returns are even better for stocks that have the combination of a Growth Score of A or B and a Zacks # 1 (strong buy) or 2 (buy) ranking.
Here are three of the most important factors that make this company’s stock a great choice for growth right now.
Profit growth
Arguably, nothing is more important than profit growth, as most investors seek rising profit levels. For growth investors, double-digit earnings growth is highly preferable, as it is often seen as an indication of strong prospects (and share price gains) for the company under consideration.
While the historic growth rate of BPA for The Joint Corp. is 104.3%, investors should actually focus on projected growth. The company’s EPS is expected to grow 51.7% this year, beating the industry average, which calls for EPS growth of 14.3%.
Cash flow growth
Cash is the lifeblood of any business, but above average cash flow growth is more beneficial and important for growth-oriented businesses than for mature businesses. Indeed, a high accumulation of liquidity allows these companies to undertake new projects without raising expensive external funds.
Currently, the year-over-year cash flow growth for The Joint Corp. is 34%, which is higher than many of its peers. In fact, the rate compares to the industry average of 15.4%.
While investors should actually be mindful of the current growth in cash flow, it’s also worth taking a look at the historic rate to put the current reading in perspective. The annualized growth rate of the company’s cash flow has been 24% over the past 3-5 years, compared to 13.7% on average in the industry.
Revisions to promising earnings estimates
Beyond the measures described above, investors should take into account the trend of revisions to earnings estimates. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
There have been upward revisions to current year profit estimates for The Joint Corp. Zacks’ consensus estimate for the current year has jumped 24.7% over the past month.
Final result
The Joint Corp. not only achieved a Growth Score of B based on a number of factors including those discussed above, but it also holds a Zacks Rank # 2 due to positive revisions to earnings estimates.
You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
This combination indicates that The Joint Corp. is a potential outperformer and a solid choice for growth investors.
5 actions in the process of doubling
Each was selected by a Zacks expert as the # 1 favorite stock to earn + 100% or more in 2021. Previous recommendations climbed + 143.0%, + 175.9%, + 498.3% and + 673.0%.
Most of the stock in this report is flying under Wall Street’s radar, which provides a great opportunity to get into the ground floor.
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The Joint Corp. (JYNT): Free shares analysis report
To read this article on Zacks.com, click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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