Universal Technical Institute: A Strong Growth Stock for Investors

Investors often look for growth stocks to take advantage of above-average financial growth. These stocks typically attract considerable market attention and can yield exceptional returns. However, identifying promising growth stocks poses challenges.

Many growth stocks come with above-average risks and volatility. Betting on a stock whose growth story may be waning can result in significant losses.

Fortunately, the Zacks Growth Style Score makes the task of finding potential growth stocks easier. This system goes beyond traditional growth metrics to assess a company’s actual growth prospects.

Currently, our proprietary system recommends Universal Technical Institute (UTI) as a noteworthy stock. It possesses a favorable Growth Score and a top Zacks Rank.

Research indicates that stocks exhibiting robust growth features tend to outperform the market. Stocks with a Growth Score of A or B along with a Zacks Rank of #1 (Strong Buy) or #2 (Buy) show even greater returns.

Several factors make Universal Technical Institute a compelling growth choice. Below, we outline three important points:

Earnings Growth

Earnings growth is arguably the most crucial indicator for investors. Strong profit levels are what drive interest in growth investing. Double-digit earnings growth is especially sought after as it signals robust prospects and potential stock price increases.

Universal Technical has shown a historical EPS growth rate of 43.1%. However, the projected EPS growth of 34% this year is particularly impressive, significantly outpacing the industry average of 23.8%.

Cash Flow Growth

Cash flow is vital for any business, but growth-oriented companies benefit particularly from strong growth in cash flow. This growth allows them to expand without solely relying on external funding.

Currently, Universal Technical boasts a year-over-year cash flow growth of 60.3%, well above many competitors. This impressive rate contrasts sharply with the industry average of just 3.2%.

Investors should note both current and historical cash flow growth rates for context. Universal Technical’s annualized cash flow growth over the past 3-5 years has been 63.3%, compared to the industry average of 7.4%.

Promising Earnings Estimate Revisions

A stock’s performance can also be validated by examining trends in earnings estimate revisions. Upward movement in earnings estimates typically indicates positive sentiment regarding future performance. Empirical evidence shows a strong link between earnings estimate trends and subsequent stock price movements.

Recently, Universal Technical experienced upward revisions in current-year earnings estimates, with the Zacks Consensus Estimate rising 0.5% over the last month.

Bottom Line

Universal Technical has achieved a Growth Score of A based on several key metrics, including those discussed above. It also holds a Zacks Rank of #2, reflecting positive earnings estimate revisions.

This combination positions Universal Technical favorably for potential outperformance, making it an attractive option for growth investors.

Zacks Names #1 Semiconductor Stock

Our top semiconductor stock is just a fraction of NVIDIA’s size, which soared over +800% since our recommendation. Although NVIDIA remains strong, this new stock has substantial room to grow.

With robust earnings growth and a growing customer base, it is well-positioned to meet the high demand for technologies such as Artificial Intelligence, Machine Learning, and the Internet of Things. The global semiconductor market is estimated to expand from $452 billion in 2021 to $803 billion by 2028.

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This article was originally published on Zacks Investment Research (zacks.com).

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