With earnings season just getting started, now is a great time to take a look at my “First Profit stock screen. The idea is to find companies that have not shown a profit for at least the previous four quarters, but have just recently produced their first profit this past quarter.
I run this screen after every earnings season, and often find great stocks to buy. And here we are again.
Some of these companies will be relatively new, and this recent profit may be the only profit in the company’s history so far. Other companies may have a long history of profitability, but for whatever reason haven’t seen a profit in a while — but have finally returned to profitability.
I like this concept because, if the trend has been one of improvement, there’s a good chance the trend will continue. This is true whether you’ve been profitable or are just getting profitable.
But some people (like myself for example) dislike buying companies that cannot show a profit. And there are many others who won’t even consider a stock unless it’s making money.
Losing less than the previous quarter is indeed an improvement — they’re growing less unprofitable. And it’s even better if the losses are less and less in each sequential quarter.
But there’s something entirely different about growth AND being profitable. And those are the stocks that will likely see the best new demand from new investors; people who are now, all of a sudden, willing to take notice of, and pay attention to, the stock.
And that’s what we’re screening for today:
- EPS for the previous 4 quarters less than or equal to 0
- EPS for the recently reported quarter greater than 0
- Current price greater than or equal to 5
I prefer to only look at companies over $5. But if you drop this item from the screen, it’ll currently produce three times as many stocks coming through the screen.
The screen is pretty simple yet pretty powerful.
Here are five stocks that made it through this week’s screen:
Get the rest of the stocks on this list and start looking for the newest companies that fit this criteria. It’s easy to do. And it could help you find your next ‘best’ stock. Start screening for these companies today with a free trial to the Research Wizard.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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