Value-seeking investors could be interested in the following stocks as they are growing earnings faster than sales, indicating the existence of efficient operating activities as sales growth is turned into higher net income.
As screening criteria, this research considers past five-year revenue growth rates of no less than 5% per annum and past five-year net income growth rates of no less than 10% per annum.
McGrath RentCorp
The first stock to consider is McGrath RentCorp (MGRC, Financial).
Based in Livermore, California, McGrath RentCorp rents and sells relocatable modular buildings, liquid and solid containment tanks and boxes, portable storage containers and electronic test equipment to several businesses in the U.S. and internationally.
The company saw its trailing 12-month revenue increase by 7.1% and its trailing 12-month net income increase by 22.7%, both on average every year over the last five years.
The stock traded at around $69.79 per share at close on Friday for a market cap of $1.68 billion and a dividend yield of 2.41%.
GuruFocus assigned a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10 to the company.
Wall Street sell-side analysts issued a median recommendation rating of buy for this stock and have generated an average target price of $80.33 per share.
CBIZ
The second stock to consider is CBIZ Inc. (CBZ, Financial).
Based in Cleveland, Ohio, CBIZ provides financial, insurance and advisory services to North American individuals, small and mid-tier businesses as well as public organizations and not-for-profit enterprises.
The company saw its trailing 12-month revenue increase by 6.1% and its trailing 12-month net income increase by 19.8%, both on average every year over the last five years.
The stock was trading at around $25.91 per share at close on Friday for a market cap of $1.41 billion. CBIZ does not pay dividends.
GuruFocus assigned a score of 5 out of 10 to the company's financial strength rating and of 8 out of 10 to its profitability rating.
Wall Street sell-side analysts recommend a median rating of buy for this stock and have produced an average target price of $29.50 per share.
Griffon
The third stock to consider is Griffon Corp. (GFF, Financial).
Based in New York, Griffon manufactures and sells various tools and accessories, including home and building products as well as professional and defense electronics products, serving consumers, professionals and various businesses in North America and internationally.
The company saw its trailing 12-month revenue increase by 11.8% and its trailing 12-month net income increase by 15.4%, both on average every year over the last five years.
The stock traded at around $22.46 per share at close on Friday for a market capitalization of $1.26 billion and a dividend yield of 1.36%.
GuruFocus assigned the company a score of 4 out of 10 for its financial strength rating and of 7 out of 10 for the profitability rating.
Wall Street sell-side analysts recommend a median rating of buy for this stock and have established an average target price of $30.67 per share.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- 3 Stocks With Low 12-Month and Forward PEG Ratios
- A Trio of Non-Cyclical Stocks to Consider
- A Trio of High-Return Businesses With Solid Balance Sheets
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