3 Reasons Why Growth Investors Should Consider Globus Medical (GMED)

Growth investors are always on the lookout for stocks that promise above-average growth in earnings and can deliver exceptional returns. Discovering such a growth stock can be challenging, especially given the inherent volatility and risks associated with these investments. Investors must be cautious to avoid stocks whose growth potential is diminishing.

Fortunately, using tools like the Zacks Growth Style Score can simplify the search for promising growth stocks. This system goes beyond traditional growth metrics to uncover companies with robust growth potential.

One standout stock that fits these criteria is Globus Medical (GMED). Not only does it have a solid Growth Score, but it also enjoys a favorable ranking from Zacks.

Research indicates that stocks with superior growth characteristics tend to outperform the market consistently. Particularly, those stocks with a Growth Score of A or B and a Zacks Rank of #1 (Strong Buy) or #2 (Buy) show even higher potential for returns.

Here are three compelling reasons why Globus Medical could be an excellent addition for growth-focused investors.

Earnings Growth

Earnings growth is critical for investors, as increasing profit levels often signal a strong business future. For growth investors, double-digit earnings growth is particularly appealing because it indicates promising prospects and potential stock price appreciation.

While the historical earnings per share (EPS) growth rate for Globus Medical stands at 14.2%, the focus should be on projected growth. The company’s EPS is expected to grow by an impressive 28.4% this year, significantly outpacing the industry average forecast of 16.5%.

Cash Flow Growth

Cash flow is vital for any business, but for growth-oriented companies, a higher-than-average cash flow growth rate is crucial. This growth allows these companies to invest in their expansion without relying heavily on costly external funding.

Currently, Globus Medical is experiencing year-over-year cash flow growth of 72.4%, a remarkable figure when compared to its peers and the industry average of -4.9%.

Additionally, considering the historical context of this cash flow growth is essential. Over the past 3-5 years, the company has maintained an annualized cash flow growth rate of 18.2%, significantly better than the industry average of 5.4%.

Positive Earnings Estimate Revisions

Another factor that underscores the strength of a stock is the trend in its earnings estimate revisions. A healthy upward trend is encouraging, as research shows a strong link between these revisions and short-term stock price movements.

For Globus Medical, there have been recent upward revisions in the estimates for current-year earnings. The Zacks Consensus Estimate for the current year has increased by 4.7% over the last month, further indicating positive momentum.

Conclusion

In conclusion, the positive trends in earnings estimates make Globus Medical a Zacks Rank #2 stock. It also holds a Growth Score of B, reflecting its strong growth characteristics.

This combination of positive attributes signifies that Globus Medical presents a compelling opportunity for growth investors looking for potential outperformers in the market.

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