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Give Me Sales Growth! 7 Ideas

In an era of massive stock buy-backs, fueled by ultra low interest rates, EPS results are even more suspect than usual.

The "usual" quarterly dance routine by corporate America of one-time charges, creative stock option expensing, and other non-GAAP sleight-of-hand can put enough fluff in the bottom line. Buy-backs add a turbo-charge to the profit engineering.

So what's the solution? A really great one is to simply focus on the top line, in essence, the revenues and their growth rate.

To help us do that, I go to one of my favorite types of stock screens that searches for companies with rising revenue estimates.

Today I ran the Zacks Premium screen called Sales & Earnings Growth Winners and found only 20 stocks out of over 4,000 that made it through the gauntlet. Here is the basic description of the screen...

Stocks with strong sales and earnings growth with a Zacks Rank 1 or 2, and a Zacks Growth Style Score of A or B. Add in rising earnings estimates, effective management (ROE), and good liquidity (Current Ratio), and you get a list of strong and stable growth stocks.

I picked seven stocks from the screen to share with you. Before we talk about them, here are the specific criteria that were used to filter our giant database of companies and their metrics...

Screen Parameters

  • Zacks Rank <= 2
  • Zacks Growth Style Score <= B
  • Sales Growth (F0/F-1) >= 10%
  • EPS Growth (F0/F-1) >= 10%
  • Projected EPS Growth (F1/F0) >= 10%
  • ROE >= 10%
  • Current Ratio >= 1
  • % Change F1 Est. (4 weeks) >= 0
  • % Change Q1 Est. (4 weeks) >= 0
  • % Change Q2 Est. (4 weeks) >= 0
  • Last Close (price) >= 5
  • Avg. 20-Day Volume >= 100,000

7 Names Worth Mentioning

Here are seven stocks that are moving top line growth as well as the bottom one...

Alibaba Group (BABA) is the e-commerce giant that I fondly call "the Amazon of China." For the current fiscal year ending in March, the company is stacking up whopping sales of $22.66 billion which represents 43% annual growth! And the analyst estimates are projecting BABA will grow that haul another 31.5% to $29.8 billion into 2018.

Applied Materials (AMAT) is a $38 billion semiconductor industry equipment maker, supplying the world's major chip manufacturers with advanced solutions across may high-tech areas that have moved the company beyond relying on the withering desk-top PC market.

Growth areas include 3D NAND and OLED displays that serve diverse technology markets like big data, the Internet of...