Growth investors are always on the lookout for stocks with exceptional financial growth, knowing that these gems often deliver solid returns. The challenge lies in unearthing these treasures amidst the volatility and inherent risk that comes with high-growth securities. After all, no one wants to be left holding the bag when a growth story goes sour.
But fear not, for the Zacks Growth Style Score is here to guide investors through the treacherous terrain of the market. This unique system goes beyond the traditional growth metrics to evaluate a company’s true growth potential. And right now, it’s singing the praises of Tetra Tech (TTEK), a consulting and engineering services company that stands out as a prime growth pick.
The Power of Earnings Growth
When it comes to growth stocks, earnings growth reigns supreme. Companies with soaring profit levels tend to attract hordes of investors, especially those eyeing double-digit earnings growth. Tetra’s historical EPS growth rate of 14.6% is impressive, but the real kicker is the projected growth of 8.8% this year, outpacing the industry average of 7%.
Cash Flow: The Lifeblood of Growth
Cash flow is the lifeblood of any business, but for growth-oriented companies, above-average cash flow growth is like nectar from the heavens. Tetra’s year-over-year cash flow growth of 31% eclipses many of its peers and stands tall against the industry average of 6.1%. Digging deeper, the company’s historical cash flow growth rate of 13.4% over the past 3-5 years shows a promising trajectory.
The Promise of Earnings Estimate Revisions
Aside from earnings and cash flow, investors should keep a keen eye on earnings estimate revisions. Positive trends in these revisions often herald good tidings for stock prices. Tetra has seen upward revisions in its current-year earnings estimates, with the Zacks Consensus Estimate surging 2.9% in the past month.
The Bottom Line: Tetra Shines Bright
With a Growth Score of B and a Zacks Rank #2, Tetra not only ticks all the right boxes but also paints a promising picture for growth investors. This potent combination signifies that Tetra is primed for success, making it a compelling choice for investors looking to ride the wave of growth.
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