The following seven large-cap or better stocks are rated positive by Reuters, have substantial EPS growth rates of greater than 44 percent over the current year, great stories and positive catalysts for future growth. The earnings per share of a company is conceivably the most important statistic to understand before investing in a company’s stock. Each time you consider starting a position in a stock, you should prudently scrutinize its earnings information.
The reason earnings are so vital to investors is because they tell you about the relative profitability of a company. Earnings per share is defined as the net income of a company divided by the shares of common stock outstanding. With the EPS measure, you are looking at the amount of money left over for shareholders. The value is reported after taxes are subtracted, and we are normalizing those profits by stating them on a per-share basis.
When a company is profitable, and has money to give back to shareholders in the form of earnings, the company has two basic options. It can distribute some of the earnings in the form of a stock dividend. Factor this in with the fact that historically, dividend-paying stocks have outperformed non-dividend-paying stocks, and you have a recipe for outstanding returns. After the precipitous drop in the Dow in 2008, the high-dividend-payers were the first to recover.Whatever is not paid out in the form of dividends is placed into the retained earnings, which then become a source of capital that can be used to help support the growth of a company.
These are bullish indicators regarding a stock's possible future performance. Moreover, most of these stocks are trading well below consensus analysts’ estimates. Several have recent upgrades and positive analyst comments.Many analysts are predicting a recession going forward. I don’t see it happening. How soon we forget: Just weeks ago you heard nothing of a recession, and now it is assured, according to the crowd. In my experience the crowd is usually wrong.
There may be more volatility in front of us even with the more than 10% drop in the market recently. Nevertheless this may be a good point to start a position in these buying opportunities. As Warren Buffett says, “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”
Seven highly rated large-cap or better stocks with EPS growth rates over their current fiscal year of greater than 44 percent are: Wynn Resorts Ltd. (WYNN), Cummins Inc. (CMI), BB&T Corporation (BBT), Discover Financial Services (DFS), CF Industries Holdings, Inc. (CF), Agrium Inc. (AGU) and Peabody Energy Corp. (BTU).
Below are two tables with detailed statistics regarding each company’s current summary information, earnings per share and dividend information, followed by a brief review of each company, detailed current analysts' estimates and up/downgrade activity, followed by a chart of the company's key statistics. Please use this as a starting point for your own due diligence.
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Earnings and Dividend Statistics
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Wynn Resorts Limited, together with its subsidiaries, engages in the development, ownership and operation of destination casino resorts. The company is trading significantly below analysts' estimates. WYNN has a median price target of $145 by 22 brokers and a high target of $174. The last up/downgrade activity was on Aug 12, 2011, when Barclays Capital upgraded the company from Equal Weight to Overweight.
Cummins Inc. designs, manufactures, distributes and services diesel and natural gas engines, electric power generation systems, and engine-related component products worldwide. The company is trading significantly below analyst estimates. Cummins has a median price target of $134 by 12 brokers and a high target of $158. The last up / downgrade activity was on Dec 14, 2010, when Boenning & Scattergood initiated coverage on the company with an Outperform rating.
BB&T Corporation operates as the financial holding company for Branch Banking & Trust Co. that provides banking and trust services to small and mid-size businesses, public agencies, local governments, and individuals in the United States. The company is trading significantly below analysts' estimates. BB&T has a median price target of $30.00 by 30 brokers and a high target of $35. The last up/downgrade activity was on April 25, 2011, when Oppenheimer downgraded the company from Outperform to Perform.
Discover Financial Services, together with its subsidiaries, operates as a credit card issuer and electronic payment services company primarily in the United States. The company is trading below analysts' estimates. Discover Financial has a median price target of $28.50 by 18 brokers and a high target of $31. The last up/downgrade activity was on Aug 12, 2011, when RBC Capital Markets upgraded the company from Outperform to Top Pick.
CF Industries Holdings, Inc., through its subsidiary, CF Industries, Inc., manufactures and distributes nitrogen and phosphate fertilizer products, serving agricultural and industrial customers worldwide. The company is trading slightly below analysts' estimates. CF Industries has a median price target of $30.00 by 30 brokers and a high target of $35. The last up/downgrade activity was on Jul 25, 2011, when Dahlman Rose upgraded the company from Hold to Buy.
Agrium Inc., together with its subsidiaries, produces and markets agricultural nutrients, industrial products, and specialty products worldwide, as well as involves in the retail supply of agricultural products and services in North and South Americas and Australia. The company is trading significantly below analysts' estimates. Agrium has a median price target of $109 by 24 brokers and a high target of $120. The last up/downgrade activity was on Oct 21, 2010, when Stifel Nicolaus upgraded the company from Hold to Buy.
Peabody Energy Corporation, through its subsidiaries, engages in the exploration, mining, and production of coal. The company is trading below analysts' estimates. Peabody Energy has a median price target of $75 by 19 brokers and a high target of $85. The last up/downgrade activity was on Oct 8, 2010, when BMO Capital Markets downgraded the company from Outperform to Market Perform.