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Alberto Abaterusso
Alberto Abaterusso
Articles (2189) 

3 Fast-Growing Earnings Stocks Set to Outperform

Their 5-year EPS growth tops the S&P 500 index

January 08, 2020 | About:

The S&P 500 Index, which is the benchmark for the U.S. market, has grown its annual earnings per share (not inflation adapted) by 41% over the last five years (8.2% annually), producing a 60.3% growth in the share price to $3,237.18 at close on Jan. 7.

Even though past performance is not a guarantee for future results, selecting companies that have posted more than 41% growth in their annual earnings per share over the observed period gives your search more chances to uncover stocks with a high potential to outperform.

To provide investors with a reliable estimate of future earnings growth, this search accounts for earnings per share without non-recurring items, as this metric excludes one-time entries.

Wendy's

The chart below exhibits that The Wendy's Co. (NASDAQ:WEN) has grown its trailing 12-month earnings per share without non-recurring items by nearly 61% over the last five years, pushing the share price up 121.2% to $21.96 at close on Tuesday. The stock surpassed the S&P 500 index by 80.2% over the same period.

The Dublin, Ohio-based quick-service restaurant chain has a market capitalization of $4.96 billion, a price-earnings ratio of 39.21 versus the industry median of 24.7 and a price-sales ratio of 3.1 versus the industry median of 0.95.

The stock has an overweight recommendation rating from Wall Stret sell-side analysts, with a price target of $22.74.

Trian Fund Management, L.P. is the biggest fund holder of the company with 11.78% of outstanding shares, followed by The Vanguard Group Inc with 7.72% and Invesco Ltd with 4.78%.

CTS

The chart below illustrates that CTS Corp. (NYSE:CTS) has grown its trailing 12-month earnings per share without non-recurring items by nearly 56% over the past five years. As a result, CTS’s share price rose 81.4% to close at $30.06 on Tuesday, topping the S&P 500 index by 4.5% over the same period.

The company is an Illinois-based producer and seller of a broad range of electronic components serving original equipment manufacturers active in several industries. The stock has a market capitalization of $980 million, a price-earnings ratio of 23.12 versus the industry median of 19.72 and a price-sales ratio of 2.11 compared to the industry median of 1.12.

The stock has Wall Street overweight recommendation rating and a price target of $32.33 per share.

Wellington Management Group LLP is the largest fund holder of the company with 8.56% of outstanding shares, followed by Price T Rowe Associates Inc with 8.19% and Mario Gabelli with 6.38%.

SmartFinancial

The chart below shows that SmartFinancial Inc. (NASDAQ:SMBK) has grown its trailing 12-month earnings per share without non-recurring items by 56% over the past five years, which caused the share price to increase 66.2% to close at $22.60 on Tuesday.

The Knoxville, Tennessee-based holding of a regional bank has a market cap of $315.7 million, a price-earnings ratio of 12.02 compared to the industry median of 12.07 and a price-sales ratio of 3.51 versus the industry median of 2.98.

The stock has an overweight recommendation rating from Wall Street and a price target of $24.29 per share.

With 4.06% of outstanding shares, Banc Funds Co LLC is the company's biggest fundholder, followed by The Vanguard Group Inc with 3.95% and Private Capital with 3.53%.

Disclosure: I have no positions in any securities mentioned in this article.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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