5 Top Profitable Stocks With Terrific Growth in the Offing

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A company with a high level of profitability is able to meet all its operating and non-operating costs and expenses, and still provides high returns to its investors. A profitable company with strong fundamentals usually offers enormous gains to its investors. In this respect, we have used an accounting ratio to recognize a profitable company from a loss-making one.

The best accounting tool to understand a company's profitability position is ratio analysis. Generally, there are four key profitability ratios - gross income ratio, operating income ratio, pre-tax profit margin and net income ratio. Here, we have used the most effective and frequently used profitability ratio - net income ratio.

Net Income Ratio

Net income ratio gives us the exact profit level of a company. It reflects the percentage of net income to total sales revenues. Using net income ratio, one can determine a company's capability to meet operating and non-operating expenses with its sales revenues. A higher net income ratio usually implies a company's ability to generate ample sales revenues and successfully manage all business functions.

Screening Parameters

Net income ratio is not the only indicator of future winners. So, we have added a few more criteria to arrive at a winning strategy.

Zacks Rank equal to #1: Only Zacks Rank #1 (Strong Buy) stocks are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off. You can see  the complete list of today's Zacks #1 Rank stocks here .

12-Month Trailing Sales and Net Income Growth Higher than X Industry:  Stocks that possess higher sales and net income growth in the last 12 months showcase better financial performance.

12-Month Trailing Net Income Ratio Higher than X Industry:  High net income ratio indicates a company's solid profitability.

% Rating Strong Buy greater than 70%:  This indicates that 70% of the analysts covering these stocks are optimistic.

These few parameters narrowed down the universe of over 7,865 stocks to only 13.

Here are five of the 13 stocks that qualified the screen:

Weight Watchers International, Inc.  WTW is a provider of weight management services. It has an average four-quarter positive earnings surprise of more than 100%.

Aeterna Zentaris Inc.  AEZS is a specialty biopharmaceutical company. It has an average four-quarter positive earnings surprise of more than 100%.

TransUnion  TRU is a provider of risk and information solutions, withan average four-quarter positive earnings surprise of 6.2%.

Six Flags Entertainment Corporation  SIX is an operator of regional theme and water parks.It has an average four-quarter positive earnings surprise of 8.2%.

Johnson Outdoors Inc.  JOUT is a designer of outdoor equipment, diving, watercraft and marine electronics. It has an average four-quarter positive earnings surprise of more than 100%.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks' portfolios and strategies are available at:  https://www.zacks.com/performance .

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TransUnion (TRU): Free Stock Analysis Report

Johnson Outdoors Inc. (JOUT): Free Stock Analysis Report

Six Flags Entertainment Corporation New (SIX): Free Stock Analysis Report

AEterna Zentaris Inc. (AEZS): Free Stock Analysis Report

Weight Watchers International Inc (WTW): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: TRU , JOUT , SIX , AEZS , WTW

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