Zacks.com featured highlights include NIKE, AGCO, Docusign and InterDigital
For Immediate Release
Chicago, IL – September 17, 2022 – Stocks in this week’s article are NIKE NKE, AGCO AGCO, Docusign DOCU and InterDigital IDCC.
Bet on 4 Top-Ranked Stocks with Rising P/E Ratios
Investors often opt for the stock-picking approach that involves stocks with a low price-to-earnings (P/E) ratio. This strategy is based on the notion that the lower the P/E ratio is, the higher the stock value will be. The reasoning behind this is straightforward — when a stock's current market price does not adequately reflect its higher earnings, it suggests growth potential.
But there is more to this whole P/E story. Because not only low P/E, stocks with a rising P/E can also fetch strong returns. In this regard, investors can bet on the likes of NIKE, AGCO, Docusign and InterDigital.
Rising P/E: A Useful Tool
The concept is that as earnings rise, so should the price of the stock. As forecasts for expected earnings come in higher, strong demand for the stock should continue to push up its prices. After all, a stock's P/E gives an indication of how much investors are ready to shell out per dollar of earnings.
Suppose an investor wants to buy a stock with a P/E ratio of 30. This means that he is willing to shell out $30 for only $1 worth of earnings as he expects earnings of the company to rise at a faster pace in the future, owing to strong fundamentals.
So, if the P/E of a stock is rising steadily, it means that investors are assured of its inherent strength and expect some strong positives out of it.
Also, 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 the four stocks:
Nike: The Zacks Rank #2 company is engaged in the business of designing, developing and marketing of athletic footwear, apparel, equipment and accessories, and services for men, women and children worldwide. You can see the complete list of today’s Zacks #1 Rank stocks here.
The average four-quarter earnings surprise of NKE is 41.99%.
AGCO: The Zacks Rank #1 company is a leading manufacturer and distributor of agricultural equipment and related replacement parts.
The average four-quarter earnings surprise of AGCO is 316.76%.
Docusign: The Zacks Rank #1 company is a global provider of cloud-based software.
The average four-quarter earnings surprise of DOCU is 6.92%.
InterDigital: The Zacks Rank #1 company is a pioneer in advanced mobile technologies that enable wireless communications and capabilities.
The average four-quarter earnings surprise of IDCC is 54.27%.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2752325/bet-on-4-top-ranked-stocks-with-rising-pe
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