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5 Stocks With Solid Sales Growth to Counter Choppy Markets

In extremely volatile markets like now, it becomes increasingly difficult for investors to choose stocks. Currently, markets are facing concerns regarding the ongoing Russia-Ukraine conflict and unprecedented inflation numbers.

Thus, the conventional stock picking strategy is useful amid such a dismal scenario. One such method is selecting stocks with steady sales growth. In this regard, stocks like Target Corporation TGT, Tesla, Inc. TSLA, Huntington Ingalls Industries HII, Clean Harbors, Inc. CLH and Occidental Petroleum Corporation OXY are worth betting on.

Sales growth is a key metric for any company, as it is an essential part of growth projections and is instrumental in strategic decision-making. By observing this metric over a period of time, one can clearly understand a company’s growth trend.

It’s worth keeping in mind that when companies incur a loss, although briefly, they are valued on their revenues, as top-line growth (or decline) is usually an indicator of a firm’s future earnings performance.

A company can improve earnings by resorting to cost-control measures while maintaining stable revenues. It is to be noted that sustainable bottom-line growth invariably requires higher revenues.

While sales growth provides investors an insight into product demand and pricing power, it doesn’t indicate whether the company is operating efficiently. A huge sales number does not necessarily convert into profits.

Hence, consideration of a company’s cash position and sales number can be a more dependable strategy. Substantial cash in hand and a steady cash flow give a company more flexibility with respect to business decisions and investments.

Selecting the Winning Stocks

In order to shortlist stocks with impressive sales growth and a high cash balance, we have selected 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow more than $500 million as our main screening parameters.

But sales growth and cash strength are not the absolute criteria for selecting stocks. Hence, we have added certain other factors to arrive at a winning strategy.

P/S Ratio less than X-Industry: This metric determines the value placed on each dollar of a company’s revenues. The lower the ratio, the better it is for picking a stock since the investor is paying less for each unit of sales.

% Change F1 Sales Estimate Revisions (four weeks) greater than X-Industry: Estimate revisions, better than the industry, are often seen to trigger an increase in stock price.

Operating Margin (average last five years) greater than 5%: Operating margin measures how much every dollar of a company's sales translates into profits. A high ratio indicates that the company has good cost control and sales are increasing faster than costs — an optimal situation.

Return on Equity (ROE) greater than 5%: This metric will ensure that sales growth is translated into profits and the company is not hoarding cash. A high ROE means that the company is spending wisely and is in all likelihood profitable.

Zacks Rank less than or equal to 2: Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform, irrespective of the market environment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Here are five of the 23 stocks that qualified the screening:

Minneapolis, MN-based Target provides an array of goods ranging from household essentials and electronics to toys and apparel for men, women and kids. TGT has evolved from just being a pure brick-&-mortar retailer to an omni-channel entity.

Target’s expected sales growth rate for fiscal 2023 is 3.5%. The stock currently carries a Zacks Rank #2.

Based in Austin, TX, Tesla is the market leader in battery-powered electric car sales in the United States, with roughly 70% market share. TSLA operates under two segments: Automotive and Energy Generation & Storage.

Tesla’s sales are expected to jump 52.1% for 2022. The stock sports a Zacks Rank #1 at present.

Based in Newport News, VA, Huntington Ingalls designs, builds and maintains nuclear-powered ships and non-nuclear ships for the U.S. Navy and Coast Guard and provides after-market services for military ships around the globe. HII operates through three segments: Ingalls division, Newport News Shipbuilding division and Technical Solutions division.

Huntington Ingalls’ expected sales growth for 2022 is 13.9%. The company, at present, carries a Zacks Rank #2.

Headquartered in Norwell, MA, Clean Harbors is a leading provider of environmental, energy and industrial services in North America. CLH operates the largest number of hazardous waste incinerators, landfills and treatment, storage and disposal facilities.

Clean Harbors’ expected sales growth rate for 2022 is 18.6%. The stock carries a Zacks Rank #2 at present.

Houston, TX-based Occidental Petroleum is an integrated oil and gas company with significant exploration and production exposure. OXY is also a producer of a variety of basic chemicals, petrochemicals, polymers and specialty chemicals.

Occidental Petroleum’s expected sales growth rate for 2022 is 11%. The stock sports a Zacks Rank #1 currently.

Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance


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Target Corporation (TGT) : Free Stock Analysis Report
 
Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
 
Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
Clean Harbors, Inc. (CLH) : Free Stock Analysis Report
 
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