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Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market’s attention and deliver solid returns. However, it isn’t easy to find a great growth stock. <\/p>\n
By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company’s growth story is over or nearing its end, betting on it could lead to significant loss. <\/p>\n
However, it’s pretty easy to find cutting-edge growth stocks with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company’s real growth prospects. <\/p>\n
Accel Entertainment (ACEL) is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank. <\/p>\n
Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). <\/p>\n
Here are three of the most important factors that make the stock of this company a great growth pick right now. <\/p>\n
Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration. <\/p>\n
While the historical EPS growth rate for Accel Entertainment is 5.3%, investors should actually focus on the projected growth. The company’s EPS is expected to grow 20.2% this year, crushing the industry average, which calls for EPS growth of 15.8%. <\/p>\n
Asset utilization ratio — also known as sales-to-total-assets (S\/TA) ratio — is often overlooked by investors, but it is an important indicator in growth investing. This metric shows how efficiently a firm is utilizing its assets to generate sales. <\/p>\n
Right now, Accel Entertainment has an S\/TA ratio of 1.26, which means that the company gets $1.26 in sales for each dollar in assets. Comparing this to the industry average of 0.62, it can be said that the company is more efficient. <\/p>\n
In addition to efficiency in generating sales, sales growth plays an important role. And Accel Entertainment is well positioned from a sales growth perspective too. The company’s sales are expected to grow 6.3% this year versus the industry average of 2.1%. <\/p>\n<\/p><\/div>\n
Beyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements. <\/p>\n
There have been upward revisions in current-year earnings estimates for Accel Entertainment. The Zacks Consensus Estimate for the current year has surged 2.4% over the past month. <\/p>\n
While the overall earnings estimate revisions have made Accel Entertainment a Zacks Rank #2 stock, it has earned itself a Growth Score of B based on a number of factors, including the ones discussed above. <\/p>\n
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. <\/p>\n
This combination positions Accel Entertainment well for outperformance, so growth investors may want to bet on it. <\/p>\n
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report<\/a> <\/p>\n Accel Entertainment, Inc. (ACEL) : Free Stock Analysis Report<\/a> <\/p>\n This article originally published on Zacks Investment Research (zacks.com).<\/a> <\/p>\n