Investors often seek out growth stocks in order to take advantage of above-average growth in financials, which can lead to exceptional returns. However, finding a great growth stock can be a challenging task. These stocks typically come with above-average risk and volatility, and investing in a stock where the growth story is already over can result in significant losses.
The Zacks Growth Style Score, part of the Zacks Style Scores system, goes beyond traditional growth attributes to analyze a company’s real growth prospects. This makes it easier to identify cutting-edge growth stocks. Universal Health Services (UHS) is currently recommended by this system, boasting a favorable Growth Score and a top Zacks Rank.
Studies have shown that stocks with strong growth features consistently outperform the market, particularly those with a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). Universal Health Services stands out as a great growth pick for several reasons.
Earnings growth is a key factor for investors, as stocks with surging profit levels tend to attract attention. While Universal Health Services has a historical EPS growth rate of 1.8%, its projected EPS growth for this year is an impressive 31.2%, outpacing the industry average.
Another important factor is the asset utilization ratio, which shows how efficiently a company is using its assets to generate sales. Universal Health Services has an S/TA ratio of 1.05, indicating efficient asset utilization compared to the industry average of 0.86. The company also shows promising sales growth, expected to be 8.6% this year versus the industry average of 3.7%.
Additionally, positive earnings estimate revisions are a good indicator for investors. Universal Health Services has seen upward revisions in current-year earnings estimates, with the Zacks Consensus Estimate increasing by 0.5% over the past month.
In conclusion, Universal Health Services has earned a Growth Score of A and a Zacks Rank #2, making it well-positioned for outperformance. Growth investors may want to consider betting on this stock for potential gains.