Zacks.com Featured Highlights Include: Calavo Growers, Dunkin' Brands, AmerisourceBergen, Jack In The Box And Coca-Cola European
Zacks Investment Research | Feb 05, 2020 09:09PM ET
For Immediate Release
Chicago, IL – February 6, 2020 - Stocks in this week’s article Calavo Growers Inc. (NASDAQ:CVGW) , Dunkin' Brands Group Inc. (NASDAQ:DNKN) , AmerisourceBergen Corp. (NYSE:ABC) , Jack In The Box Inc. (NASDAQ:JACK) and Coca-Cola (NYSE:KO) European Partners Plc (CCEP).
Try Rising P/E Investing with These Top 5 Stocks
Generally, stocks with a low price-to-earnings (P/E) ratio are favored by investors. The perception is that the lower the P/E, the higher will be the value of the stock. It implies that a stock’s current market price does not justify its high earnings and therefore it has room to run.
But stocks with a rising P/E can also be worth buying. We’ll tell you why.
Why Rising P/E a Valuable Tool?
Investors should note that stock price moves in tandem with earnings performance. If earnings come in stronger, the price of a stock shoots up. Solid quarterly earnings and the forward guidance boost earnings forecasts, leading to stronger demand for the stock and an uptrend in its price.
So, if the price is rising steadily, it means that investors are assured of the stock’s fundamental strength and expect some strong positives out of it. The investor expects earnings of the company to rise at a faster pace in the future on the back of strong fundamentals.
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.
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