The higher and more expensive the stock market becomes, the more important it is for investors looking to stay in the market to hunt for sales and earnings-per-share (EPS) growth. With a price-to-earnings (P/E) ratio of 18, the stock market is rich by historical standards, so these two metrics become even more critical. A new research note from Jefferies highlights companies that have seen accelerating sales and EPS growth over the past four quarters.
We screened the Jefferies list for companies that have the most potential upside and that fall in sectors favored now by Wall Street. The five we picked were Ambarella Inc. (NASDAQ: AMBA), Apple Inc. (NASDAQ: AAPL), Cisco Systems Inc. (NASDAQ: CSCO), Rite Aid Corp. (NYSE: RAD) and Ross Stores Inc. (NASDAQ: ROST).
Ambarella is a top company that develops semiconductor processing solutions for video that enable high-definition (HD) video capture, sharing and display. The company’s solutions enable the creation of video content for wearable sports cameras, automotive aftermarket cameras, Internet protocol (IP) security cameras, digital still cameras, telepresence cameras, and camcorders in the camera market, as well as managing IP video traffic, broadcast encoding and IP video delivery applications in the infrastructure market.
The company has seen solid earnings estimates recently, which suggests analysts are becoming a bit more bullish on the firm’s prospects in both the short and long term. With the right products and earnings growth, this is a solid stock for tech investors.
The Thomson/First Call consensus price target for the stocks is $71.36. Shares closed trading on Thursday at $69.25.
Apple is hardly a stranger to the tech hierarchy, and the company passed another milestone when it was added to the Dow Jones Industrial Average this week, replacing the venerable AT&T Inc. (NYSE: T).
The company absolutely crushed earnings estimates when it reported back in January, hitting on all cylinders. With huge sales of both iPhone 6 models, the iconic Silicon Valley firm has traded in spectacular fashion since. Wall Street analysts say flat-out since the first introduction of the iPhone, the company has transformed the world of mobility and totally re-morphed as a company. Many point to what remains a very strong product cycle story, and basically call Apple the best in class technology story.
Apple Pay also appears to be off to a solid start and also likely will generate its own, high-margin revenue stream and be a source of solid recurring revenue, a key e-commerce point. With a huge $145 billion stockpile of cash, some analysts expect new capital allocations strategies, and they see the new Apple Pay as a source of solid recurring revenue.
Apple investors are paid a 1.47% dividend. The consensus is price objective is $139.05. The shares closed trading at $127.49.