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Zacks.com featured highlights: Principal Financial Group, Regeneron Pharmaceuticals, Zebra Technologies, United Technologies and T. Rowe Price Group

For Immediate Release

Chicago, IL – June 30, 2017 - Stocks in this week’s article include Principal Financial Group Inc. (NYSE: PFG Free Report ), Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN Free Report ), Zebra Technologies Corporation (NASDAQ: ZBRA Free Report ), United Technologies Corporation (NYSE: UTX Free Report ) and T. Rowe Price Group, Inc. (NASDAQ: TROW Free Report ).

Screen of the Week of Zacks Investment Research:

5 Top-Ranked Stocks with Impressive Sales Growth to Buy Now

Steady sales growth holds the key to survival in an ever changing and highly competitive business environment. But when it comes to picking stocks, investors often ignore sales growth as a reliable metric. This might be because of their preconceived notion that a company’s stock price is typically sensitive to its earnings momentum.

Nevertheless, it’s worth keeping in mind that when companies incur losses, albeit temporarily, they are valued based on their revenues, as top-line growth (or decline) is usually an indicator of a company’s future earnings performance.

Further, a company can improve earnings by resorting to expense control measures while maintaining stable revenues. However, sustainable bottom-line growth invariably requires higher revenues.

Hence, the Price-to-Sales (P/S) ratio can be an apt metric for stock valuation. The importance of this metric lies in the fact that management has limited scope to manipulate revenues unlike earnings.

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

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

Choosing the Winning Stocks

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

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

Price-to-Sales (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 (4 Weeks) greater than X-Industry: Better-than-industry estimate revision has often been seen to trigger an increase in the stock price.

Operating Margin (Average Last 5 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 for the company.

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

Here are five of the 12 stocks that qualified the screening:

Principal Financial Group Inc. (NYSE:PFG Free Report ) provides an expansive range of retirement savings, investment and insurance products and services. This Des Moines, IA-based company currently has long-term expected EPS growth rate of 9.1% and carries a Zacks Rank #2.

Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN Free Report ), based in Tarrytown, NY, is a biopharmaceutical company that discovers, invents, develops, manufactures, and commercializes medicines for the treatment of serious medical conditions. It has long-term expected earnings per share (EPS) growth rate of 21.1%. The company sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here .

Zebra Technologies Corporation (NASDAQ:ZBRA Free Report ), based in Lincolnshire, IL, designs, manufactures, sells, and supports direct thermal and thermal transfer label printers, radio frequency identification printer/encoders, dye sublimation card printers, real-time locating solutions, related accessories, and support software. The company has a long-term expected EPS growth rate of 9% and carries a Zacks Rank #2.

United Technologies Corporation (NYSE:UTX Free Report ) provides technology products and services to building systems and aerospace industries. This Farmington, CT-based company has a long-term expected EPS growth rate of 8.5% and a Zacks Rank #2.

Headquartered in Baltimore, MD, T. Rowe Price Group, Inc. (NASDAQ:TROW Free Report ) provides a broad array of mutual funds, sub-advisory services and separate account management services. The company currently has a long-term expected EPS growth rate of 9.7% and a Zacks Rank #2.

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.

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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.

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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.

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Principal Financial Group Inc (PFG): Free Stock Analysis Report
 
Regeneron Pharmaceuticals, Inc. (REGN): Free Stock Analysis Report
 
Zebra Technologies Corporation (ZBRA): Free Stock Analysis Report
 
United Technologies Corporation (UTX): Free Stock Analysis Report
 
T. Rowe Price Group, Inc. (TROW): Free Stock Analysis Report
 
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