Vertex (VERX): A Strong Growth Stock to Consider
Investors often look for growth stocks to take advantage of their above-average financial performance, but finding the right ones can be challenging. Such stocks come with higher risks and volatility, and choosing one whose growth potential has faded could lead to considerable losses.
Yet, tools like the Zacks Growth Style Score can make it easier for investors to identify promising growth stocks by analyzing a company’s genuine growth potential beyond standard metrics. Vertex (VERX) stands out in this regard, showing strong growth indicators and earning a top Zacks Rank.
Research indicates that stocks with the right growth characteristics often outperform the market. In fact, those with a Zacks Growth Score of A or B, paired with a Zacks Rank of #1 (Strong Buy) or #2 (Buy), tend to see even greater returns. Here are three key reasons why Vertex is considered a great growth pick now.
Impressive Earnings Growth
Earnings growth is crucial for keeping investors interested. Stocks with rapidly increasing profits are particularly appealing. Ideally, growth investors look for companies with double-digit earnings growth, a strong indicator of future gains.
Vertex has a historical EPS growth rate of 25.6%. However, what truly catches the eye is its projected earnings per share (EPS) growth of 60.3% for this year, outperforming the industry average of 33.3% significantly.
Robust Cash Flow Growth
Cash flow is vital for any business, but it plays an even larger role for growth companies. Healthy cash flow growth allows these businesses to expand without needing costly external funding.
Currently, Vertex boasts a year-over-year cash flow growth rate of 21.3%, which is striking compared to the industry average of -15%. Over the past 3-5 years, their annualized cash flow growth rate has been 42.8%, well above the industry average of 13.8%.
Positive Earnings Estimate Revisions
The trend in earnings estimate revisions offers further validation of a stock’s growth potential. A positive trend often signals a good chance of future price movements. Vertex has seen upward revisions in its current-year earnings estimates, with the Zacks Consensus Estimate increasing by 1.1% over the past month.
The Bottom Line
Vertex has achieved a Zacks Rank of #2 based on favorable earnings estimate revisions and holds a Growth Score of A, supported by the factors discussed above. This combination makes Vertex a compelling choice for growth investors looking to make strategic bets.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
