Amid the recent favorable price action within the market, several stocks are nearing or breaking 52-week highs, including Shopify ( SHOP Quick Quote SHOP – Free Report ) , The Gap ( GPS Quick Quote GPS – Free Report ) , and StoneCo ( STNE Quick Quote STNE – Free Report ) .
And in addition to recent momentum, all three sport a favorable Zacks Rank, reflecting upward earnings estimate revisions among analysts. Let’s take a closer look at each for those who like to tap into relative strength.
Shopify
Shopify shares have been monster performers in 2023, up more than 100% amid a broader rebound for growth stocks overall.
The company has seen positive earnings estimate revisions across multiple timeframes, landing it into the highly-coveted Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Shopify’s growth expectations are impossible to ignore, with consensus expectations for its current year (FY23) suggesting 1650% earnings growth on 25% higher sales. Peeking ahead to FY24, consensus estimates allude to a further 50% earnings growth paired with a 20% sales bump.
The Gap
With more than 3,800 stores worldwide, The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories, and personal care products. Like SHOP, analysts have raised their earnings expectations across the board in a big way.
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Investors also stand to reap an income stream from GPS shares, currently yielding a solid 2.8% annually. Still, it’s worth noting that the company’s payout hasn’t increased for some time, perhaps steering away those with an income-focused approach.
The company has consistently blown away quarterly expectations as of late, exceeding the Zacks Consensus EPS Estimate by an average of 140% across its last four releases. Just in its latest print, GPS posted a 190% EPS beat and reported revenue 4% ahead of the consensus.
Shares saw a considerable boost post-earnings, as we can see illustrated below by the green arrow.
Image Source: Zacks Investment Research
StoneCo
StoneCo, a current Zacks Rank #1 (Strong Buy), offers an end-to-end cloud-based technology platform to conduct electronic commerce across in-store, online, and mobile channels. Analysts have taken their earnings expectations higher across all timeframes.
Image Source: Zacks Investment Research
Like SHOP, it’s hard to ignore the company’s growth profile, with earnings forecasted to climb 170% in its current year on 10% higher sales. Peeking ahead to FY24, consensus expectations suggest an additional 35% of earnings growth paired with a 13% revenue increase.
Shares aren’t overly expensive given the forecasted growth, with the current 21.1X forward earnings multiple well beneath the 42.5X five-year median and highs of 140.2X in 2020. The stock sports a Style Score of “C” for Value.
Image Source: Zacks Investment Research
Bottom Line
Relative strength investing is all about riding the trend. And when you add in rising earnings estimate revisions, these stocks have the fuel needed to continue climbing.
For those seeking stocks with strong momentum and a brightened earnings outlook, all three above – Shopify ( SHOP Quick Quote SHOP – Free Report ) , The Gap ( GPS Quick Quote GPS – Free Report ) , and StoneCo ( STNE Quick Quote STNE – Free Report ) – fit the criteria nicely.
