Investors are often drawn to growth stocks due to their potential for above-average financial growth, which can lead to exceptional returns. However, identifying a great growth stock can be a challenging task.
Growth stocks are known for their volatility and above-average risk. There is also the risk of investing in a stock whose growth story is coming to an end. To help investors in finding cutting-edge growth stocks, the Zacks Growth Style Score analyzes a company’s real growth prospects beyond traditional growth attributes.
One stock that is currently recommended by this system is Comfort Systems (FIX). This company not only has a favorable Growth Score but also holds a top Zacks Rank. Research has shown that stocks with the best growth features tend to outperform the market, especially those with a Growth Score of A or B and a Zacks Rank of #1 (Strong Buy) or 2 (Buy).
Comfort Systems, a heating, ventilation, and air conditioning company, is considered a great growth pick for several reasons. Here are three key factors:
1. Earnings Growth:
Earnings growth is crucial for attracting investors, with double-digit growth often indicating strong prospects for a company. Comfort Systems has a historical EPS growth rate of 27% and is projected to grow by 36.2% this year, surpassing the industry average of 10.5%.
2. Cash Flow Growth:
High cash flow growth is essential for growth-oriented companies as it enables them to expand without relying on external funds. Comfort Systems’ year-over-year cash flow growth is 45.1%, higher than many peers and above the industry average of 24.9%.
3. Promising Earnings Estimate Revisions:
Positive trends in earnings estimate revisions are a good sign for investors. Comfort Systems has seen upward revisions in current-year earnings estimates, with the Zacks Consensus Estimate increasing by 4.2% over the past month.
In conclusion, Comfort Systems has earned a Zacks Rank #1 and a Growth Score of A, indicating its potential to outperform and making it a solid choice for growth investors.