Meta Platforms: A Growth Stock with Promising Potential

Growth investors seek stocks that show strong financial growth, capturing market interest and delivering solid returns. However, pinpointing a growth stock that realizes its full potential can be challenging.

These stocks often come with heightened risk and volatility. If a company’s growth phase is declining or coming to an end, investing in it can result in substantial losses.

Fortunately, the Zacks Growth Style Score offers a practical way to discover innovative growth stocks. This tool evaluates companies on their actual growth potential beyond standard metrics.

Currently, Meta Platforms (META) stands out as a top recommendation from this proprietary system. It has an excellent Growth Score and a strong Zacks Rank.

Research indicates that stocks with superior growth characteristics tend to outperform the market. Those with a Growth Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) showcase even more improved returns.

Let’s explore three significant reasons why Meta Platforms is a great growth stock right now.

Strong Earnings Growth

Earnings growth is a critical factor for investors. Companies with robust profit increases attract more investor interest. A double-digit earnings growth rate is particularly appealing, indicating strong prospects for stock price appreciation.

Meta Platforms has a historical EPS growth rate of 18.2%. However, the focus should be on future projections. For this year, its EPS is expected to surge by 50.9%, significantly surpassing the industry average of 28.4%.

High Asset Utilization Ratio

Many growth investors overlook the asset utilization ratio, crucial for determining how effectively a company is using its assets to generate sales. Meta Platforms currently boasts a sales-to-total-assets (S/TA) ratio of 0.67, meaning it generates $0.67 in sales for every dollar of assets, outperforming the industry average of 0.58.

Sales growth is equally important. Meta Platforms is projected to achieve a 20.8% sales growth this year, compared to the industry average of 7.8%.

Positive Earnings Estimate Revisions

A positive trend in earnings estimate revisions can also signal a stock’s strong potential. Research shows a strong link between estimate revisions and short-term stock performance.

For Meta Platforms, analysts have recently raised their earnings estimates for the current year. The Zacks Consensus Estimate has increased by 5.1% over the last month.

Conclusion

With a Growth Score of A and a Zacks Rank #2, Meta Platforms demonstrates solid potential for growth investors, bolstered by the positive trends discussed above.

For those interested, a complete list of Zacks #1 Rank (Strong Buy) stocks is available.

Top Stock Pick: An Explosive Opportunity

Among thousands of stocks, five Zacks experts have each identified a favorite poised to grow by over 100% in the coming months. Director of Research Sheraz Mian has selected one company he believes has the most explosive growth potential.

This company focuses on the millennial and Gen Z demographics, generating nearly $1 billion in revenue last quarter. Following a recent dip in price, now could be the perfect time to invest. While not every elite pick transforms into a winner, this one could outperform recent Zacks picks like Nano-X Imaging, which climbed 129.6% in less than nine months.

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Meta Platforms, Inc. (META): Free Stock Analysis Report.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.