Investors often look for growth stocks to take advantage of above-average financial growth, which can result in exceptional returns. However, finding a great growth stock can be challenging due to the high risk and volatility typically associated with these stocks. Investing in a stock where the growth potential has already peaked or is nearing its end can lead to significant losses.
To help identify cutting-edge growth stocks, the Zacks Growth Style Score is a useful tool that goes beyond traditional growth attributes to analyze a company’s true growth prospects. One such stock currently recommended by this system is Baker Hughes (BKR), which not only has a favorable Growth Score but also a top Zacks Rank.
Research has shown that stocks with strong 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).
Three key factors make Baker Hughes a great growth pick at the moment:
1. Earnings Growth: Earnings growth is a crucial factor for investors, as stocks with rapidly rising profit levels often attract attention. Baker Hughes has a historical EPS growth rate of 34.2% and is projected to grow by 30.8% this year, well above the industry average of 7.8%.
2. Cash Flow Growth: High cash flow growth is essential for growth-oriented companies, as it enables them to undertake new projects without relying on external funds. Baker Hughes currently boasts a cash flow growth rate of 37.9%, outperforming many of its peers and the industry average of 18.8%.
3. Promising Earnings Estimate Revisions: Positive trends in earnings estimate revisions can further validate a stock’s superiority. Baker Hughes has seen upward revisions in current-year earnings estimates, with the Zacks Consensus Estimate for the current year increasing by 0.1% in the past month.
Overall, Baker Hughes has earned a Zacks Rank #2 and a Growth Score of B, indicating its potential as an outperformer and a solid choice for growth investors.