Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. However, it isn't easy to find a great growth stock.<\/p>\n
In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.<\/p>\n
However, it's pretty easy to find cutting-edge growth stocks with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.<\/p>\n
National Storage (NSA Quick QuoteNSA - Free Report) is one such stock that our proprietary system currently recommends. The company not only has a favorable Growth Score, but also carries a top Zacks Rank.<\/p>\n
Research shows that stocks carrying the best growth features consistently beat the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better.<\/p>\n
Here are three of the most important factors that make the stock of this real estate investment trust a great growth pick right now.<\/p>\n
Earnings Growth<\/p>\n
Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.<\/p>\n
While the historical EPS growth rate for National Storage is 12.2%, investors should actually focus on the projected growth. The company's EPS is expected to grow 29.7% this year, crushing the industry average, which calls for EPS growth of 7.3%.<\/p>\n
Cash Flow Growth<\/p>\n
Cash is the lifeblood of any business, but higher-than-average cash flow growth is more beneficial and important for growth-oriented companies than for mature companies. That's because, high cash accumulation enables these companies to undertake new projects without raising expensive outside funds.<\/p>\n
Right now, year-over-year cash flow growth for National Storage is 51.7%, which is higher than many of its peers. In fact, the rate compares to the industry average of -2%.<\/p>\n
While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 25.4% over the past 3-5 years versus the industry average of 11.1%.<\/p>\n
Promising Earnings Estimate Revisions<\/p>\n
Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.<\/p>\n
The current-year earnings estimates for National Storage have been revising upward. The Zacks Consensus Estimate for the current year has surged 1.3% over the past month.<\/p>\n
Bottom Line<\/p>\n
National Storage has not only earned a Growth Score of B based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.<\/p>\n
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.<\/p>\n
This combination indicates that National Storage is a potential outperformer and a solid choice for growth investors.<\/p>\n
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Continue reading here: Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. However, it isn't easy to find a great growth stock. In addition to volatility, these stocks carry above-average risk by their very nature. Continue reading
\nIs National Storage (NSA) a Solid Growth Stock? 3 Reasons to Think " Yes " - Zacks.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"