For Immediate Release
Chicago, IL – December 22, 2022 – Stocks in this week’s article are Clovis Oncology
CLVS
, NiSource
NI
, DocuSign
DOCU
, Root
ROOT
and Endava
DAVA
.
Bet on 5 Top Stocks with Rising P/E Ratios
Investors always look for stocks with low P/E ratios as the measure indicates undervaluation. This ratio is obtained by dividing a stock’s current market price by its historical or estimated earnings. It tells how much an investor needs to shell out per dollar of earnings.
In fact, the golden rule is – the lower the P/E of a stock, the higher its value will be for investors. This is because value investors believe that a stock’s current market price is not reflective of its historical/future earnings and, therefore, chances of outperformance are higher.
But there is another side to the story that points to stocks with an increasing P/E. But this often-overlooked trend can prove pivotal in finding great stocks.
How Can Rising P/E Be Helpful?
Investors should note that stock prices move in tandem with earnings performance. If earnings come in stronger, the price of a stock soars. Solid quarterly earnings and guidance in turn boost the earnings forecast, leading to stronger demand for the stock and an uptrend in its price.
So, if the price is rising steadily, it means that investors are assured of the stock’s fundamental strength, expect some strong positives out of it as well as solid and faster earnings growth. Moreover, studies have revealed that stocks have seen their P/E ratios jump over 100% from their breakout point in the cycle. So, if you can pick stocks early in their breakout cycle, you can end up seeing considerable gains.
Here are five out of the 27 stocks:
Clovis Oncology:
Clovis Oncology, Inc. is a biopharmaceutical company focused on acquiring, developing and commercializing innovative anti-cancer agents. The stock has a Zacks Rank #2.
The average earnings surprise of CLVS for the past four quarters is 5.19%.
NiSource
: This Zacks Rank #2 energy holding company, together with its subsidiaries, provides natural gas, electricity and other products and services in the United States.
The average earnings surprise of NI for the past four quarters is 0.33%.
DocuSign:
Zacks Rank #2 DocuSign is a global provider of cloud-based software. The company’s DocuSign Agreement Cloud is a cloud software suite that automates and connects the entire agreement process.
The average earnings surprise of DOCU for the past four quarters is 6.60%.
Root
: This is the parent company of Root Insurance Company. It is a technology company revolutionizing personal insurance with a pricing model. ROOT currently carries a Zacks Rank #1.
The average earnings surprise of ROOT for the past four quarters is 22.44%.
Endava
: The Zacks Rank #2 company provides information technology services. It offers software engineering, cloud transformation, test automation, technology consulting and other related services.
The average earnings surprise of DAVA for the past four quarters is 11.03%.
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.
For the rest of this Screen of the Week article please visit Zacks.com at:
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