What are we looking for?
Large-cap North American companies that exhibit growth characteristics across a series of profitability metrics and analyst estimates.
Today's screen looks at companies headquartered in either Canada or the United States with a market capitalization of at least $1-billion (U.S.). Each company in our screen must have at least seven analysts covering the stock – an indicator of the overall size and attention garnered by the company. Next, two of Thomson Reuters' proprietary StarMine models are shown – the Analyst Revisions model, which gives a ranking (out of 100) based on the changes in analyst sentiment for price and estimate targets, and the Earnings Quality ranking, which measures the sustainability of a company's revenue stream. In both cases, we are looking for a ranking of at least 75.
Next, the earnings-per-share predicted surprise metric includes only companies that saw positive earnings surprises last quarter. Finally, the compound annual growth rate (CAGR) for both the past five years and estimated earnings for the next five years must be at least a 10 per cent.
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What did we find?
Today's large-cap growth screen includes 16 companies. Lam Research Corp. had one of the highest aggregated scores across the Analyst Revisions and Earnings Quality models, which, coupled with a compound annual growth rate of 43.1 per cent over the past five years, helps explain the increase in its stock price of more than 88 per cent over the past 12 months (not shown). General merchandise giant Dollarama was the largest Canadian company in the results, and with strong growth and earnings sustainability metrics across the board, should be poised to keep up its impressive earnings growth for the long term.
This commentary does not provide individualized advice or recommendations for any specific subscriber or portfolio. Investors should conduct further research before investing.
Ryan Gottschalk is an account manager at Thomson Reuters.
Companies with strong profitability metrics
|Company||Ticker||Market Cap ($Mil U.S.)||Recent Price Close ($ Local Currency)||No. of Analysts||Analyst Revisions Model Rank||Earnings Quality Rank||EPS - Predicted Surprise||Fwd EPS 5Y Growth*||Trailing EPS 5Y Growth*|
|Advanced Energy Industries||AEIS-Q||3,108||78.15||7||87||91||0.1%||13.5%||47.9%|
|Align Technology Inc.||ALGN-Q||11,520||143.41||13||96||95||0.5%||15.0%||22.8%|
|Applied Materials Inc.||AMAT-Q||47,649||44.34||23||96||98||0.2%||19.7%||62.5%|
|Arista Networks Inc.||ANET-N||10,784||149.76||27||76||99||1.1%||11.4%||61.7%|
|Baxter Int'l Inc.||BAX-N||31,071||57.15||16||94||88||0.5%||10.1%||19.2%|
|Childrens Place Inc.||PLCE-Q||1,902||107.70||10||87||96||0.1%||11.3%||16.2%|
|Dave & Buster's Ent. Inc.||PLAY-Q||2,880||69.44||9||79||76||0.9%||11.0%||81.1%|
|Lam Research Corp.||LRCX-Q||24,924||154.51||20||96||97||0.3%||15.9%||43.1%|
|Thor Industries Inc.||THO-N||5,461||103.84||11||91||78||0.4%||10.9%||24.9%|
|Ulta Beauty Inc.||ULTA-Q||18,673||301.02||24||80||93||0.3%||13.3%||24.5%|
Source: Thomson Reuters Eikon
*Annualized growth rates