Here are some of our stock screen ideas in value, growth, and more to jumpstart your analysis.
After posting their first loss in 2018 since the financial crisis, global markets rallied last year and are now trading at new record highs. Investors have broadly disregarded geopolitical tensions, trade wars, and other risks, and instead focused primarily on persistent earnings growth. A trend to watch in the coming weeks and months is multiple expansion, as stock prices (as measured by the S&P 500) have risen at a faster pace compared with underlying forward earnings.
Looking for value
With stocks trading at record highs, valuation may be a particularly important factor when seeking investing ideas. The price-to-earnings (P/E) ratio is among the most widely used measures of value by investors. An extension of the P/E ratio that some investors believe adds value when evaluating the relative attractiveness of a stock is the price-to-earnings growth (PEG) ratio, which incorporates growth.
The PEG ratio divides a stock’s forward P/E by its projected annual earnings-per-share growth rate. Generally, a higher PEG ratio implies a pricier stock, and a lower PEG ratio implies a cheaper stock. Typically, a value greater than 1.0 indicates a stock that is trading at a premium, and a value less than 1.0 indicates one that is trading at a discount.
Here are the top results for large-cap stocks with the lowest PEG ratio (under 1.0), as of January 23:
- American International Group ( AIG Loading…)—0.39 PEG ratio
- Icici Bank ( IBN Loading…)—0.57 PEG ratio
- Synchrony Financial ( SYF Loading…)—0.58 PEG ratio
- NetEase ( NTES Loading…)—0.69 PEG ratio
- Credit Suisse ( CS Loading…)—0.69 PEG ratio
- Spotify ( SPOT Loading…)—0.71 PEG ratio
- Citigroup ( C Loading…)—0.76 PEG ratio
- VMware ( VMW Loading…)—0.79 PEG ratio
- Toyota Motor ( TM Loading…)—0.83 PEG ratio
- Delta Air Lines ( DAL Loading…)—0.83 PEG ratio
Of course, stock screens require additional research for any of the results that you are considering. When using P/E or the PEG ratio, it’s important to recognize there may be reasons for it to be low. That is, the “price” component of the P/E or PEG ratio may be lower relative to peers due to fundamental company weakness or some other legitimate reason. Simply because a stock is trading at a discount based on its P/E or PEG ratio to comparable companies, that doesn’t necessarily mean it has better relative value.
Going for growth
Looking more for growth than value, there are a variety of options you can select in a screener to generate ideas. These include earnings growth, revenue growth, and cash flow growth.
Here are the top stock ideas for mid-cap and larger stocks with the highest forward earnings per share long-term growth (3-5 years), highest revenue growth (past 5 years), and cash flow growth rate (past 5 years), sorted by market cap, as of January 23:
- Amazon ( AMZN Loading…)
- Adobe ( ADBE Loading…)
- Salesforce ( CRM Loading…)
- Netflix ( NFLX Loading…)
- Broadcom ( AVGO Loading…)
- Charter Communications ( CHTR Loading…)
- Vertex Pharmaceuticals ( VRTX Loading…)
- JD.com ( JD Loading…)
- Shopify ( SHOP Loading…)
- Atlassian ( TEAM Loading…)
A factor to think about when evaluating this list is that it is technology-sector heavy: Many tech companies tend to prioritize growth. It also includes a depository receipt for a foreign company, an investment that carries its own unique risks.
Stock analyst recommendations
Whether you do all of your own research as an active investor or you incorporate advice from others, recommendations from research analysts—professional experts who closely follow individual stocks—can provide useful information on both sentiment for a stock as well as a deep dive into the fundamentals of a company.
- AbbVie (ABBV)—Very bullish
- Citigroup ( C)— Very bullish
- UnitedHealth Group ( UNH )—Very bullish
- Adobe ( ADBE )—Very bullish
- Intel ( INTC )—Very bullish
- Eli Lilly ( LLY )—Very bullish
- Qualcomm ( QCOM )—Very bullish
- Apple ( AAPL )—Very bullish
- GlaxoSmithKline ( GSK )—Very bullish
- Amgen ( AMGN)—Very bullish
- Vertex Pharmaceuticals ( VRTX )—Very bullish
- Vipshop ( VIPS )—Bullish
- XPO Logistics ( XPO )—Neutral
- Parsley Energy ( PE )—Neutral
- Tesla ( TSLA)—Very Bullish
More research is needed to determine if any of these stock ideas or stocks are right for your specific strategy. You should fully understand the risks involved, and each investing opportunity should be considered within the context of a well-diversified investment strategy that conforms to your specific time horizon, objectives, and risk parameters.