3 Reasons Growth Investors Will Love AmerisourceBergen (ABC)

This story originally appeared on Jacques

Investors look for growth stocks to capitalize on above-average growth in financials that help these securities grab market attention and deliver exceptional returns. However, finding a great growth stock isn’t easy.

– jaxo

By their very nature, these stocks carry above average risk and volatility. Furthermore, if a company’s growth story is over or nearing its end, betting on it can result in significant losses.

However, it’s much easier to find cutting-edge growth stocks with the help of the Jax Growth Style Score (part of it). Jacques Styles Score Systems), which looks beyond the traditional development characteristics to analyze the real growth prospects of the company.

AmerisourceBergen (ABC) is on a list of stocks that are currently recommended by our ownership system. In addition to a favorable Growth Score, it holds a top Jax rank.

Research shows that stocks with the best growth features consistently outperform the market. And for stocks that have a combination of a Growth Score of A or B and a Jax Rank #1 (strong buy) or 2 (buy), the returns are even better.

Here are the three most important factors that make this drug distributor’s stock a great growth pick at the moment.

income growth

Earnings growth is arguably the most important factor, as stocks displaying exceptionally rising profit levels capture the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often regarded as a sign of strong prospects (and stock price gains) for the company in question.

While AmerisourceBergen’s historical EPS growth rate is 11.1%, investors should really pay attention to the projected growth. The company’s EPS is expected to grow 16.6% this year, crushing the industry average, which calls for 10.6% growth in EPS.

Impressive Asset Utilization Ratio

Growth investors often overlook the asset utilization ratio, also known as the sales-to-total-assets (S/TA) ratio, but it is an important characteristic of a true growth stock. This metric shows how efficiently a firm is using its assets to generate sales.

Right now, AmerisourceBergen’s S/TA ratio is 4.06, which means the company receives $4.06 for every dollar of assets sold. Comparing this to the industry average of 0.81 it can be said that the company is more efficient.

While the level of efficiency matters a lot in generating sales, so does increasing a company’s sales. And AmerisourceBergen looks attractive from a sales growth standpoint as well. The company’s sales are expected to grow 10.8% this year, compared to the industry average of 9.1%.

Promising Earnings Estimate Revision

The stock’s superiority in the context of the metrics outlined above can be further validated by observing the trend in earnings forecast revision. A positive trend is certainly favorable here. Empirical research shows that there is a strong correlation between trends in earnings forecast revision and near-term stock price movements.

Current year earnings projections for AmerisourceBergen have increased. The Jacques consensus estimate for the current year is up 1.1% over the previous month.

ground level

While overall earnings forecast revisions have made AmerisourceBergen the Zacks Rank #2 stock, it earned itself a growth score of A based on a number of factors, including those discussed above.

you can see See the full list of today’s Jax #1 ranked (strong buy) stocks here,

This combination shows that AmerisourceBergen is a potential outperformer and a solid choice for growth investors.

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