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Alberto Abaterusso
Alberto Abaterusso
Articles (1853) 

3 Stocks With Fast-Growing Earnings

Their share prices are set to go higher

January 16, 2020 | About:

Do you want to choose stocks that carry a high potential to keep on pushing their share prices up? Then you may want to consider those stocks that beat the S&P 500 index, which is the benchmark for the U.S. market, in terms of a higher earnings per share growth rate.

The S&P 500 index has grown its earnings by 41% over the past five years through June 30, giving a 60.3% boost to the price, which closed at $3,289.29 on Jan. 15.

Past performance cannot be taken as a guarantee for future results. However, it provides an indicator of those businesses that are better positioned than many of their peers.

Because of the above reasons, investors may be interested in Paycom Software Inc (NYSE:PAYC), Installed Building Products Inc (NYSE:IBP) and Gray Television Inc (NYSE:GTN), as these companies have topped the S&P 500 in terms of higher earnings growth over the past five years.

Sell-side analysts on Wall Street also recommend these stocks and have released ratings of overweight to buy for them.

Paycom

The chart below illustrates that Paycom Software Inc has grown its trailing 12-month earnings per share without non-recurring items by 163% over the past five years. As a result, Paycom Software’s share price rose 81.4% to close at $289.09 on Wednesday, performing 1,070.4% better than the S&P 500.

Based in Oklahoma City, the company provides small to mid-sized U.S. companies with  cloud-based human capital management software.

The stock has a market capitalization of $16.88 billion, a price-earnings ratio of 101.44 versus the industry median of 26.27 and a price-sales ratio of 24.27 compared to the industry median of 2.22.

The stock has a Wall Street overweight recommendation rating and a price target of $252.41 per share.

GuruFocus assigned a very high rating of 8 out of 10 for both the company’s financial strength and its profitability.

Installed Building

The chart below shows that Installed Building Products Inc has grown its trailing 12-month earnings per share without non-recurring items by 975% over the last five full fiscal years as it shifted from a 20 cents loss per share in 2014 to a net profit per share of $1.75 per share in 2018. This caused the share price to grow about 280% as much as the S&P 500 over the past five years. The share price closed at $75.78 on Wednesday.

The Columbus, Ohio-based installer of building products and equipment has a market cap of $2.27 billion, a price-earnings ratio of 34.76 compared to the industry median of 13.18 and a price-sales ratio of 1.55 versus the industry median of 0.6.

The stock has an overweight recommendation rating from Wall Street and a price target of $75.56 per share.

GuruFocus assigned a moderate financial strength rating of 5 out of 10 and a very positive profitability rating of 7 out of 10.

Gray Television

The chart below exhibits that Gray Television Inc has grown its trailing 12-month earnings per share without non-recurring items by nearly 53% over the last five years, pushing the share price up 120.2% to $22.44 at close on Wednesday. The stock price grew faster than the S&P 500 index by 60% over the same period.

The Atlanta, Georgia-based television broadcasting company has a market capitalization of $2.24 billion, a price-earnings ratio of 14.19 versus the industry median of 18 and a price-sales ratio of 1.09 versus the industry median of 1.2.

The stock has a buy recommendation rating from Wall Street sell-side analysts, with an average price target of $26.29.

GuruFocus assigned a low rating of 3 out of 10 for the company’s financial strength but a very high rating of 8 out of 10 for its profitability.

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

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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