These stocks have a long track record of growing sales, Jefferies says
As earnings season kicks into high gear, investors will be searching for companies that have shown a continuous ability to grow revenue. Jefferies has some ideas. Desh Peramunetilleke, the firm’s global head of quantitative strategy, released a list of stocks that have “consistently and steadily” added to their top lines over the past one to two decades. To find these names, the firm screened all nonfinance stocks that trade in the U.S. with a market cap above $5 billion that meet the following criteria: Average 10-year and 20-year sales growth of more than 8% per year Compound annual growth of more than 8% per year for sales in 2024 and 2025 With some exceptions, have seen increases to 2024 sales estimates over the past three months Sales growth was positive in at least 14 of the past 15 years A coefficient of variation on the 15-year sales growth of less than one times, which implies that sales expansion is steady Here are 10 stocks that check all of these boxes: Alphabet is one name on the list that is slated to report after the bell on Tuesday. This report comes amid a strong year for the megacap tech stock’s valuation, which is up about 31% compared to the start of 2024. Baird analyst Colin Sebastian told clients in a Monday note to expect quarterly earnings that are in line or better than expected. He said investors should hear from the company that cloud growth is stable and the use of generative artificial intelligence is positive. Sebastian also pointed to search competition as a long-term focus for investors. After 2024’s big run, the average analysts polled by LSEG anticipate about 9% more upside in the year ahead. The majority of analysts are in the bull camp with Sebastian, who has an overweight rating. Food chains Wingstop and Texas Roadhouse also both made the list. Both have run circles around the broader market this year, with respective rallies of more than 50% and 40%. WING TXRH YTD mountain Wingstop and Texas Roadhouse, year to date Despite those jumps, Morgan Stanley analyst Brian Harbour warned that pressure on the lower-end customer can be a challenge for the industry. He listed Wingstop and Texas Roadhouse as part of a group that can win, but may see more limited upward revisions. Harbour also said valuation has become more important for these names. Both stocks have buy ratings from the average analyst surveyed by LSEG. The typical price target implies about 7% more upside for Wingstop and slightly more than 2% for Texas Roadhouse.
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