Why Growth Stocks Captivate Female Investors
Growth stocks are particularly appealing to a diverse array of investors, including women, thanks to their potential for above-average financial growth, which often garners significant market attention and yields impressive returns. However, locating a truly remarkable growth stock can be quite challenging.
The difficulty arises from the fact that these stocks typically come with higher risks and greater volatility. Investors must tread carefully, as betting on a stock whose growth narrative has fizzled out — or is approaching its expiration — could result in substantial losses.
Introducing the Zacks Growth Style Score
The Zacks Growth Style Score, an integral part of the Zacks Style Scores system, provides a valuable tool for identifying promising growth stocks. This score goes beyond conventional growth indicators to assess a company’s genuine growth potential, simplifying the search for innovative growth investments.
Currently, Progressive (PGR) is highlighted on this list as a recommended stock. It possesses an advantageous Growth Score along with a top-tier Zacks Rank, making it an enticing option for investors.
The Power of Growth Features
Research suggests that stocks demonstrating superior growth characteristics often outperform the market. Notably, those with a Growth Score of A or B and a Zacks Rank of #1 (Strong Buy) or #2 (Buy) achieve even better returns. It’s no wonder that investors are keen on stocks like Progressive, which showcase impressive growth indicators.
Three Essential Factors for Growth Investing
When it comes to evaluating growth potentials, nothing is more critical than earnings growth, as rising profit levels are what most investors seek. Aiming for double-digit earnings growth is preferable for growth investors, as it often signals strong future prospects and corresponding stock price increases.
Though Progressive’s historical EPS growth rate is 1.2%, the spotlight should be on its projected earnings growth, expected to soar by an astonishing 119.4% this year — far outpacing the industry average of 18.3%.
Another vital metric that often flies under the radar is the asset utilization ratio, or sales-to-total-assets (S/TA) ratio. This figure illustrates how effectively a company is leveraging its assets to generate revenue. Presently, Progressive’s S/TA ratio stands at 0.75, indicating the company generates $0.75 in sales for every dollar of assets it controls, significantly surpassing the industry average of 0.34.
Sales growth is another critical aspect of a company’s profile. Progressive is also exhibiting solid sales growth, with projections estimating a 20.4% increase this year, unlike the industry average of 6.8%.
The Importance of Earnings Estimate Revisions
The excellence of a stock can often be validated by observing the trend in earnings estimate revisions. A positive trend signals good news, supported by empirical studies linking these revisions with short-term stock price shifts.
For Progressive, current-year earnings estimates have seen upward movements, as the Zacks Consensus Estimate has jumped by 2.2% in just the past month. This positions Progressive not only with an A Growth Score based on various metrics, including those discussed, but also with a Zacks Rank of #2, reflecting the favorable revisions in earnings estimates.
Conclusion
With the combination of its commendable metrics, Progressive stands poised for market outperformance. Given these compelling growth features, women investors may find Progressive to be an especially attractive pick for their investment portfolios.
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