By Mary-Lynn Cesar for Kapitall.
The services sectors in the United States and the United Kingdom
expanded at a rate faster than previously forecasted in July,
according to the latest readings from leading indices in both
In the US, the Institute for Supply Management's (
, which surveys purchasing and supply managers, rose to 58.7 from
56.0 in June, the gauge's highest level since its launch in January
The Wall Street Journal
average forecast expected last month's reading to reach 56.5.
Across the pond, the
Markit/CIPS services purchasing mangers' index
increased from 57.7 in June to 59.1. Per
, economists had expected the index to only rise to 57.9 last
month. In both indices, a reading over 50 indicates
High growth in construction drove the ISM nonmanufacturing index
to its six-year high. The growth in the sector supports the belief
that the US economy is continuing to pick up speed after
contracting in the first quarter and rebounding with 4% annualized
growth in the second quarter.
Similarly, the UK's PMI reading, which was its best since
November, suggests that Britain's economy will likely see 0.8%
growth for yet another quarter. The combination of more investment
and a greater number of new orders lifted the gauge last
The encouraging readings from both indices inspired our
following list. To begin, we compiled a group of US and UK services
stocks. For our first screen, we looked for stocks that are
undervalued with a price/earnings to growth (
) ratio below 1
Sticking with earnings, we decided to further narrow down our
list by screening for stocks that are expected to see
EPS growth of 25% or higher this year
. And finally, we screened for stocks that had
high quarter-over-quarter sales growth of 25% or
We were left with six US and UK services sector stocks on our
list. Do you think these stocks will meet their EPS growth
expectations after seeing the indices readings? Use this list as a
starting point for your own analysis, and let us know what you
think in the comments.
Click on the interactive chart to view data over
1. Air Lease Corporation
): Engages in the purchase and leasing of aircraft. Market cap at
$3.59B, most recent closing price at $35.30. PEG at 0.81. EPS
is expected to grow by 36.70% this year. Sales growth quarter over
quarter at 28.30%. The company is based in the US.
2. AMC Networks Inc.
): Operates various cable televisions' brands delivering content to
audiences and a platform to distributors and advertisers in the
United States and internationally. Market cap at $5.02B, most
recent closing price at $70.07. PEG at 0.88. EPS is expected
to grow by 111.60% this year. Sales growth quarter over quarter at
37.30%. The company is based in the US.
3. Conns Inc.
): Operates as a specialty retailer of home appliances, consumer
electronics, home office equipment, lawn and garden products,
mattresses, and furniture in the United States. Market cap at
$1.21B, most recent closing price at $33.67. PEG at 0.67. EPS
is expected to grow by 62.80% this year. Sales growth quarter over
quarter at 33.60%. The company is based in the US.
4. KNOT Offshore Partners LP
): KNOT Offshore Partners LP owns and operates shuttle tankers
under long-term charters. The company provides crude oil loading,
transportation, and storage services under time charters and
bareboat charters. Market cap at $490.09M, most recent closing
price at $28.60. PEG at 0.58. EPS is expected to grow by
57.40% this year. Sales growth quarter over quarter at 61.50%. The
company is based in the UK.
5. Lakes Entertainment Inc.
): Develops, finances, and manages Indian-owned casino properties.
Market cap at $124.91M, most recent closing price at
$4.72. PEG at 0.45. EPS is expected to grow by 483.30% this
year. Sales growth quarter over quarter at 272.70%. The company is
based in the US.
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