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Here at Zacks, we don’t generally classify stocks as “cheap” or “expensive,” and rather than looking at the stock’s face value, we have a system that puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
That being said, low-priced stocks can be attractive to smaller investors that can’t necessarily afford large stakes in companies with higher priced stocks. When looking at these low-priced stocks, we can look at the same trends in growth, value, and momentum and apply the Zacks Rank to properly analyze the potential that these companies have.
Today, we wanted to focus on one of these trends in particular: growth. Of course, we always want the share prices of our stocks to grow, but the term “growth stock” refers to a company whose earnings and revenue are expected to grow at an above-average rate compared to the overall market and its industry peers.
Luckily, we at Zacks have a plethora of data to comb through. Additionally, the Zacks Rank can help us identify which growth stocks are the most likely to outperform the market. Below we have highlighted three stocks that currently have an “A” grade for Growth in our Style Scores system, as well as a Zacks Rank #1 (Strong Buy) listing. All of these stocks are also currently trading for less than $10 per share.
1. Oclaro (OCLR)
Oclaro is a provider of high performance optical components, modules, and subsystems to the telecommunications market. The company’s projected sales growth of 32.49% outpaces the industry average of 10.60%, and its projected earnings growth of 379.16% beats its industry’s already-impressive 143.86%. On top of its solid growth metrics, shares of OCLR have gained over 92% in the past 12 weeks, and the company also has an “A” grade for Momentum.
2. SITO Mobile (SITO)
SITO Mobile is a provider location-based advertising and mobile messaging platforms that allow brands to launch targeted mobile advertising campaigns. SITO’s projected sales growth of nearly 110% shines in an industry that is expected to see sales remain flat, while its expected EPS growth of 89.58% is well ahead of the industry’s 1.57% average. This is a relatively low-volume stock, but the company has recently posted surprise profits and is shaping up to have a strong fiscal year.
3. Corcept Therapeutics (CORT)
Corcept Therapeutics is a pharmaceutical company engaged in the discovery and development of drugs for severe metabolic, psychiatric, and oncologic disorders. The company is projected to see sales growth of 58.91%, despite its industry remaining flat, and its earnings are expected to grow by 266.67%, despite the fact that the industry as a whole is expected to see earnings decline by an average of 13.27%. Furthermore, Corcept has consistently outperformed the Zacks Consensus Estimate recently, beating earnings estimates by an average of 100% in each of the trailing four quarters.
A stock’s market price is not a clear indicator of whether it is a good investment. However, the nice thing about the Zacks Rank is that it can be applied to stocks of any price. Additionally, the Style Scores system, used in conjunction with the Zacks Rank, can help us find stocks that have great metrics in key categories like growth. Today, we were able to put this all together and find three stocks with a low price, great growth, and a strong Zacks Rank.