Vector (VGR) is an incredible growth stock: 3 reasons why
IInvestors look for growth stocks to capitalize on above-average growth in financial stocks that help these stocks grab market attention and produce exceptional returns. But finding good growth stock isn’t easy at all.
By their very nature, these stocks present above-average risk and volatility. Additionally, if a business’s growth story is over or coming to an end, betting on it could result in a significant loss.
However, it is quite easy to find top growth stocks using the Zacks Growth Style Score (which is part of the Zacks Style Scores system), which goes beyond traditional growth attributes to analyze growth prospects. realities of a business.
Our proprietary system currently recommends Vector Group (VGR) as one of these stocks. This company not only has a favorable growth score, but also holds a higher Zacks ranking.
Research shows that stocks with the best growth characteristics consistently beat the market. And for stocks that have a combination of a Growth Score of A or B and Zacks # 1 (strong buy) or 2 (buy), the returns are even better.
Here are three of the most important factors that make the inventory of this discount cigarette maker a great growing choice right now.
Earnings growth is arguably the most important factor, as stocks with unusually high profit levels tend to grab the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often seen as an indication of strong prospects (and share price gains) for the company under consideration.
While the historic EPS growth rate for Vector is 13.7%, investors should actually focus on projected growth. The company’s EPS is expected to grow 55% this year, beating the industry average, which calls for EPS growth of 6%.
Cash flow growth
Cash is the lifeblood of any business, but above-average cash flow growth is more beneficial and important for growth-oriented businesses than it is for mature businesses. Indeed, a high accumulation of liquidity allows these companies to undertake new projects without raising expensive external funds.
Right now, the year-over-year cash flow growth for Vector is 22.7%, which is higher than many of its peers. In fact, the rate compares to the industry average of 3.1%.
While investors should actually be mindful of the current growth in cash flow, it’s also worth taking a look at the historic rate to put the current reading in perspective. The annualized growth rate of the company’s cash flow has been 10.3% over the past 3-5 years, compared to 7.6% on average in the industry.
Revisions to promising earnings estimates
The superiority of a stock in terms of the parameters described above can be further validated by examining the trend of revisions to earnings estimates. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
Current year profit estimates for Vector have been revised up. Zacks’ consensus estimate for the current year has jumped 15.9% over the past month.
While the overall earnings estimate revisions made Vector a Tier 2 Zacks stock, it earned a growth score of B based on a number of factors, including those discussed above. .
You can see the full list of Zacks # 1 Rank (Strong Buy) stocks today here.
This combination indicates that Vector is a potential outperformator and a solid choice for growth investors.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.