Is Enterprise Products (EPD) a Solid Growth Stock? 3 Reasons to Think “Yes” – May 13, 2024

Growth stocks are a popular choice for many investors due to their potential for above-average financial growth, which can lead to exceptional returns. However, identifying a great growth stock can be challenging.

These stocks often come with higher risk and volatility compared to other types of investments. Investing in a stock that has already reached its peak growth or is nearing the end of its growth phase can result in significant losses.

Fortunately, the Zacks Growth Style Score, part of the Zacks Style Scores system, can help investors find cutting-edge growth stocks. This system goes beyond traditional growth attributes to analyze a company’s true growth prospects.

One such stock that the Zacks system currently recommends is Enterprise Products Partners (EPD). This company not only has a favorable Growth Score but also holds a top Zacks Rank.

Research has shown that stocks with strong growth features tend to outperform the market consistently. Additionally, stocks with a Growth Score of A or B and a Zacks Rank of #1 (Strong Buy) or 2 (Buy) typically deliver even better returns.

There are three key factors that make Enterprise Products a promising growth pick at the moment:

1. Earnings Growth: Earnings growth is crucial for investors, as it indicates the company’s profitability and potential for stock price gains. While Enterprise Products has a historical EPS growth rate of 4.2%, the projected growth for this year is 6.8%, surpassing the industry average of 4%.

2. Impressive Asset Utilization Ratio: The company’s sales-to-total-assets ratio of 0.75 demonstrates efficient asset utilization, outperforming the industry average of 0.67. Additionally, sales growth is expected to be 13.3% this year, higher than the industry average of 10.9%.

3. Promising Earnings Estimate Revisions: Positive trends in earnings estimate revisions are a good indicator of a stock’s potential performance. Enterprise Products has seen upward revisions in current-year earnings estimates, with the Zacks Consensus Estimate increasing by 3% in the past month.

Overall, Enterprise Products has received a Growth Score of B and a Zacks Rank #2, indicating its potential as an outperformer and a solid choice for growth investors.