Sure, there are exceptions (looking at you, meme stocks), but in general, earnings growth, or at least its potential, is a key driver sending stocks higher. Axon Enterprise Inc. (NASDAQ: AXON), Gold Fields Ltd. (NYSE: GFI) and Ceridian HCM Holding, Inc.(NYSE: CDAY) have shown price growth in recent weeks and months as Wall Street eyes net income increases of 25% or more in the next two years.
With the top-performing growth stocks, you’ll typically see big earnings-per-share increases that attract large institutional investors.
You can search for stocks with strong earnings guidance using MarketBeat’s Earnings Guidance screener.
Many growth investors like to use 25% quarterly or annual EPS growth as a starting point. While plenty of the best price leaders can make strong advances with smaller increases in earnings, it’s not unusual to find companies boast even bigger gains. Of course, you’re most likely to find big earnings increases like this in a strong economy.
A track record of strong earnings and revenue growth is often an indication of more potential ahead, is it shows a company with a product or service in high demand, and a team that’s able to deliver on that demand.
Analysts’ forecasts are also important, particularly because they help big institutional investors make decisions about buying, selling, or holding.
Axon
Axon is an Arizona-based company that’s most famous for its Taser devices, non-lethal weapons used by law enforcement agencies. The company also develops other law-enforcement and personal protection devices. Its Axon Body Camera provides video and audio recordings for police officers.
Wall Street expects Axon to grow earnings by 29% this year and another 32% in 2024. Those estimates were revised higher recently.
The company has a long history of profitability. MarketBeat earnings data for Axon show the company topping earnings estimates in the past three quarters.
Analysts have a “moderate-buy” rating on the stock. Axon has been showing its force lately, returning 37.04% year-to-date and 63.23% in the past year.
Axon’s chart shows a breakout from a cup pattern with a buy point above $193.85. It’s currently extended from a buy point, but a pullback to the 50-day line may present a new opportunity.
Gold Fields
Stock market volatility typically brings renewed attention to gold and other precious metals. In mid-March, as concerns about Silicon Valley Bank and other financial institutions led to equity market declines, South African miner Gold Fields began rapidly outpacing the S&P 500.
Broader equity markets have since settled down, satisfied that meltdowns at SVB, UBS, and First Republic Bank (NYSE: FRC) aren’t harbingers of a 2008-style financial crisis. Gold Fields, however, has just kept rising. The stock is up 41.82% in the past month and 26.62% in the past three months. Its price action is outperforming 92% of the broader equity market in the past 12 months, especially in the past three.
In late March, an executive at Gold Fields West Africa, Joshua Mortoti, said he expected a proposed joint venture between his company and AngloGold Ashanti Ltd. (NYSE: AU) to be completed late this year or early next year. The deal would create Africa's largest gold mine.
Analysts expect Gold Fields’ earnings to decline this year to $1.02 per share, down from $1.18 a share in 2022, but bounce back with 37% growth next year. Analysts have a “hold” rating on the stock.
Ceridian
Minneapolis-based Ceridian makes cloud-based software for payroll, benefits administration, time and attendance tracking, and other workforce management applications. Customers hail from numerous industries, including retail, healthcare, finance, and manufacturing.
The company recently rolled out Dayforce Wallet, which allows employees to access earned wages before their scheduled payday, without having to wait for the standard pay cycle. The funds are immediately available on the Dayforce Wallet card or can be transferred to the employee's bank account.
Ceridian’s earnings growth accelerated in the past three quarters. MarketBeat’s earnings data for Ceridian show that the company topped both revenue and earnings estimates in each of the past three quarters.
Analysts expect the company’s earnings to grow 61% this year, to $1.24 a share, and to increase another 27% next year, to $1.57 per share.
Since mid-February, the stock has been forming a consolidation with an 18% correction, with a potential buy point above $79.66. Shares are up 18.92% in the past three months.
Analysts have a “moderate buy” rating on the stock, with a price target of $79.64, an upside of 9.84%.
