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The biggest stock market winners tend to have exceptional earnings growth, and the list below highlights companies like social media giant Facebook (FB), Chinese internet stock Weibo (WB) and artificial intelligence technology leader Nvidia (NVDA) that have posted exceptional EPS gains over the last three years.
To improve your returns and reduce risk, run each stock you're tracking through a Buying Checklist to see how strongly it's displaying the most important stock-picking criteria that the market's biggest winners typically display in the early stages of a major price move.
Created with the custom screening tools in MarketSmith, this list highlights stocks with a three-year annual EPS growth rate of 50% or higher. Each stock must also have a 95 or better Composite Rating and trade at least $8 million on average per day.
Nvidia (NVDA), which is also a leader in self-driving car technology, has returned to the list after falling off in an earlier update because its Composite Rating had slipped to a 93. But the Silicon Valley-based company, which was featured in the IBD 50 before it surged over 500%, sports a 75% three-year annual EPS growth rate and has posted average earnings gains of 81% over the last three quarters.
Nvidia has now climbed out of buy range from its January breakout.
Facebook also broke out to kick off the new year, although it has struggled to gain traction. But the social media giant has rebounded from a pullback during the recent market correction and is now testing support at its 50-day moving average.
Chinese microblogging platform provider Weibo once again tops the list below with a three-year annual EPS growth rate of 282%.
The IBD 50 stock continues to see strong institutional demand for its shares, as indicated by a B+ Accumulation/Distribution Rating, 1.5 up/down volume ratio and eight quarters of rising fund ownership.
The stock is up more than 10% from a late-stage breakout last month.
PagSeguro Digital (PAGS), which provides payment processing technology solutions and went public on Jan. 24, just broke out of an IPO base and is now extended. In addition to being on the IPO Leaders list, PagSeguro has also already earned a spot on the Leaders List in IBD's Leaderboard.
Semiconductor sector stock Applied Materials (AMAT) is working on a fourth-stage double bottom showing a 58.83 buy point. As often happens with later-stage bases, Applied Materials' consolidation is wider and looser than the earlier patterns in its big run-up, meaning investors should approach any new buys with caution.
Health savings account (HSA) administrator HealthEquity (HQY) earns a spot on the list with its 66% three-year earnings growth rate, but the stock sold off this week on fears of slowing HSA enrollment. On Friday, HealthEquity showed signs of a rebound with a nearly 3% gain that put it back above its 50-day line.
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