Do you want to pick up stocks that carry a high potential to continue to move their share prices higher? Then you may want to consider those stocks that outperformed the S&P 500 index (the benchmark for the U.S. market) in terms of higher earnings per share growth over the past few years.
The S&P 500 has grown its earnings by about 32.5% over the past five years, pushing the share price up by 60.3% to $3,370.29 at close on Feb. 18, 2020.
Past performance cannot be taken as a guarantee for future results.However, investors can find it a useful tool for identifying strong businesses.
Thus, investors may want to consider Amazon.com Inc (NASDAQ:AMZN), Facebook Inc (NASDAQ:FB) and Bank of America Corp (NYSE:BAC), as these companies have exceeded the S&P 500 in terms of higher earnings growth over the observed period.
Sell-side analysts on Wall Street also recommend these stocks and have released positive ratings of overweight to buy.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Amazon.com” data-reactid=”22″>Amazon.com
The chart below illustrates that Amazon.com has grown its trailing 12-month earnings per share without non-recurring items enormously over the past five full fiscal years, passing from a loss of 52 cents per share in 2014 to a net profit of $23.01 per share in 2019. As a result, the share price rose 462%, topping the U.S. market by more than 400%. The stock closed at a price of $2,155.67 per share on Feb. 18.
The stock has a market capitalization of $1.07 trillion, a price-earnings ratio of 93.68 versus the industry median of 17.02 and a price-sales ratio of 3.88 compared to the industry median of 0.55.
Wall Street recommends buying shares of Amazon.com and has set a price target of $2,412 per share.
GuruFocus assigned a positive rating of 6 out of 10 for the company’s financial strength and a very high rating of 8 out of 10 for its profitability.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Facebook” data-reactid=”34″>Facebook
The chart below shows that Facebook Inc has grown its trailing 12-month earnings per share without non-recurring items by nearly 52% over the last five full fiscal years, causing the share price to grow about 172.6%, which beat the S&P 500 by 112.3%. The share price closed at $ 217.80 on Feb. 18.
The stock has a market capitalization of $620.83 billion, a price-earnings ratio of 33.82 compared to the industry median of 28.01 and a price-sales ratio of 8.86 versus the industry median of 3.07.
Wall Street recommends buying shares of Facebook and has established a price target of $249.23 per share.
GuruFocus assigned the company a high financial strength rating of 8 out of 10 and a very high profitability rating of 9 out of 10.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Bank of America” data-reactid=”46″>Bank of America
The chart below shows that Bank of America has grown its trailing 12-month earnings per share without non-recurring items by nearly 39% over the last five full fiscal years, pushing the share price up 109.2% to $34.27 at close on Feb. 18. The stock topped the S&P 500 by 50% over the same period.
The U.S. bank major has a market capitalization of $302.8 billion, a price-earnings ratio of 12.51 versus the industry median of 11.73 and a price-sales ratio of 3.61 versus the industry median of 2.91.
Wall Street recommends an overweight rating, which means that the share price of this stock is foreseen to outperform the industry within a year, with an average price target of $37.42 per share.
GuruFocus assigned a low rating of 3 out of 10 for the company’s financial strength but a moderate rating of 4 out of 10 for its profitability.
Disclosure: I have no positions in any securities mentioned in this article.
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<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="This article first appeared on GuruFocus.
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