Zacks.com Featured Highlights Include: Calavo Growers, EBay, GenMark Diagnostics, Telenav And Heico
Zacks Investment Research | Feb 24, 2020 08:35PM ET
For Immediate Release
Chicago, IL – February 25, 2020 – Stocks in this week’s article are Calavo Growers Inc. (NASDAQ:CVGW) , eBay Inc. (NASDAQ:EBAY) , GenMark Diagnostics Inc. (NASDAQ:GNMK) , Telenav Inc. (NASDAQ:TNAV) and Heico Corp. (NYSE:HEI) .
Go Beyond Bargain Hunting: 5 Stocks with Rising P/E
In general, investors prefer stocks that have a low price-to-earnings (P/E) ratio. The common perception is that the lower the P/E, the higher will be the value of the stock. Investors’ inclination is backed by the simple logic that if a stock’s current market price lags its earnings potential, it has room to run.
But stocks with a rising P/E are worth buying as well. 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. Investors expect 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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