Brian Bolan is the aggressive growth stock strategist at Zacks Investment Research and he has two new names for your aggressive growth radar screen.
First up is Jeld-Wen JELD which is a Zacks Rank #1 (Strong Buy). Jeld-Wen makes interior and exterior doors and cabinets and sidings for windows. Brian said this name caught his eye because the stock has tumbled after a recent beat and he blames most of that move on interest rates.
Higher interest rates are keeping home and commercial builders on the sidelines of late. The decrease in price has made this stock attractive based on the valuation multiples.
Brian highlights the solid earnings history for Jeld-Wen and notes that those solid beats have allowed management to guide Wall Street to a beatable level in future earnings reports. The estimates for this quarter have ticked slightly lower but the full year numbers are moving higher on the strength of those beats.
Jeld-Wen JELD trades at about 8x forward earnings which is very low. The price to book of 1.36x is also rather low. Brian was surprised to see the price to sales at 0.2x indicating that Wall Street does not highly value each dollar of sales. Part of the reason for that is the low 3.37% operating margin that contracted by 10 basis points in the most recent quarter.
Next up is Palo Alto Networks PANW which carries a Zacks Rank #1 (Strong Buy) and shows a more familiar growth divergence. Brian likes to see a weak Style Score for value and a strong Style Score for Growth as growth investors and value investors are inherently seeking different things.
Palo Alto Networks PANW is a much larger than Jeld-Wen (JELD) in terms of market capitalization coming in at $78B compared to just $1B. Palo Alto Networks PANW has consistently beat the Zacks Consensus Estimate and has also seen solid earnings estimate revisions.
On top of the 18% growth this year and 18% growth projected for next year Palo Alto Networks PANW is looking for 20% EPS growth this year and next. With that in mind, Brian knew that the earnings multiple would be rather high, and at 47x Brian likened it to the nifty-fifty style multiple.
The rather significant increase in margins over the last few quarters tells Brian that this is a rather stable stock despite being up at 52 week highs. A quick review of the chart shows dramatic strength and the increase of cyber of attacks of late, notably the MGM in Las Vegas but there have been dozens of others as well, make this a stock worthy of a deeper dive.
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Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report
JELD-WEN Holding, Inc. (JELD) : Free Stock Analysis Report
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