3 Reasons Why Growth Investors Shouldn't Overlook Globus Medical (GMED)

Growth investors often look for stocks that can deliver above-average financial growth, attracting market interest and potentially yielding exceptional returns. Identifying such growth stocks can, however, prove challenging.

Alongside their volatility, growth stocks inherently carry above-average risk. There's also the possibility of investing in a stock whose growth trajectory may be reaching its conclusion.

Fortunately, tools like the Zacks Growth Style Score can simplify the search for promising growth stocks. This system evaluates a company's growth potential beyond traditional metrics, enhancing the chances of finding a high-performing investment.

One stock that stands out in this regard is Globus Medical (GMED). This company not only showcases strong growth characteristics but also holds a top Zacks Rank.

Research indicates that stocks boasting superior growth attributes consistently outperform the market. Notably, stocks with a Growth Score of A or B combined with a Zacks Rank of #1 (Strong Buy) or #2 (Buy) tend to outperform significantly.

Here are three key reasons why Globus Medical is currently an attractive option for growth investors.

Earnings Growth

For growth investors, earnings growth is paramount. Rising profit levels are typically what investors are aiming for. A double-digit earnings growth rate is particularly desirable, as it suggests robust future prospects and potential stock price appreciation.

Globus Medical has an impressive historical earnings per share (EPS) growth rate of 14.2%. However, the focus should be on the projected growth, which is forecasted at 28.4% for this year, far exceeding the industry average of 16.5%.

Cash Flow Growth

Cash flow is vital for any business, but for growth companies, rapid growth in cash flow is essential. It empowers these firms to expand without relying heavily on costly external financing.

Currently, Globus Medical is experiencing a remarkable year-over-year cash flow growth rate of 72.4%, significantly higher than many competitors. This rate is particularly notable compared to the industry average, which reports a decline of 4.9%.

While current cash flow growth is critical, historical performance also paints a positive picture. The company's annualized cash flow growth rate over the past 3-5 years has been a solid 18.2%, compared to the industry's 5.4%.

Promising Earnings Estimate Revisions

A stock's metrics can be further validated by examining the trend in its earnings estimate revisions. A positive revision trend often correlates with favorable short-term stock price movements.

Globus Medical has seen upward revisions in its current-year earnings estimates, with the Zacks Consensus Estimate jumping 4.7% in the last month.

Conclusion

These factors have contributed to Globus Medical earning a Zacks Rank of #2 and a Growth Score of B, indicating it as a strong choice for growth investors looking for potential outperformers.

For more information on high-potential stocks, you can explore additional Zacks Rank #1 (Strong Buy) listings.

Growth, Investors, Stocks