5 Stocks With Solid Sales Growth To Buy Right Now

Amid the daily roller-coaster ride in the stock market, there is no set rule for successful investing. However, knowledge of some of the basic strategies should help investors in taking smart investment decisions.

Among numerous stock-picking strategies, we chose a rational down-to-earth investment approach – one that focuses on the sales growth of a company.

Sales growth is an important measure for any corporate, as it is vital to growth projections and strategic decision-making. However, investors often fail to consider sales growth as a dependable metric when it comes to picking stocks. This might be because of their preconceived notion that a company’s stock price is typically sensitive to its earnings momentum.

Interestingly, revenues are often more closely monitored than earnings when assessing the growth of a business. It’s worth keeping in mind that when companies incur a loss, albeit transitorily, they are valued on their revenues, as sales growth (or decline) is usually an indicator of a company’s future earnings performance.

Hence, the Price-to-Sales (P/S) ratio can turn out to be an appropriate metric for stock valuation. Notably, this metric’s importance lies in the fact that management has limited opportunities to manipulate sales unlike earnings.

Focusing solely on sales growth is, however, not enough. Considering a company’s cash position along with its sales number can prove to be a more dependable strategy. Substantial cash in hand and a steady cash flow give a company more flexibility with respect to business decisions and investments.

The Right Strategy

A careful selection of stocks considering certain factors should help investors to not only build wealth but beat the market as well.

In order to shortlist stocks that have witnessed impressive sales growth along with a high cash balance, we added 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow greater than $500 million as our primary screening parameters.

However, sales growth and cash strength are not the absolute criteria for selecting stocks. So, we added a few other factors to arrive at a winning strategy.

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