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Zacks.com featured highlights: Teradyne, WEX, UMB Financial, Lam Research and Morgan Stanley

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For Immediate Release

Chicago, IL - February 06, 2017 - Stocks in this week's article include Teradyne, Inc. (NYSE: TER - Free Report ), WEX Inc. (NYSE: WEX - Free Report ), UMB Financial Corporation (NASDAQ: UMBF - Free Report ), Lam Research Corporation (NASDAQ: LRCX - Free Report ) and Morgan Stanley (NYSE: MS - Free Report ).

Screen of the Week of Zacks Investment Research:

Stocks with Impressive Sales Growth to Buy Right Now

Amid ever changing market dynamics, investors are often beguiled into undertaking complex investment strategies. However, this sometimes may not yield the desired results. Hence, using conventional strategies, which are based on key fundamentals, to choose stocks is always a safe and sound approach for making profits.

Among numerous such stock-picking strategies, we have selected a rational down-to-earth investment approach - one that focuses on the sales growth of a company. However, investors often fail to consider sales growth as a dependable metric. This might be because of investors' preconceived notion that a company's stock price is typically sensitive to its earnings momentum.

Nevertheless, it's worth keeping in mind that in cases where companies incur a loss, albeit transitorily, they are valued on their revenues, as top-line growth (or decline) is usually an indicator of a company's future earnings performance. Further, a company can improve earnings by resorting to cost control measures while maintaining stable revenues. However, superior profits could be achieved through continued revenue growth.

Hence, the Price-to-Sales (P/S) ratio can turn out to be an appropriate metric for stock valuation. This metric's importance lies in the fact that management has limited opportunities to manipulate revenues unlike earnings.

While sales growth provides investors an insight into product demand and pricing power, it doesn't indicate whether the company is operating efficiently. A huge sales number does not necessarily convert into profits. Hence, considering a company's cash position along with its sales number can prove to be a more dependable strategy. Substantial cash in hand and a steady cash flow give a company more flexibility with respect to business decisions and investments.

The Winning Strategy

A careful selection of stocks considering certain factors should help investors to not only build wealth but beat the market as well.

In order to shortlist stocks that have witnessed impressive sales growth along with a high cash balance, we have added 5-Year Historical Sales Growth (%) greater than X-Industr y and Cash Flow greater than $500 million as our primary screening parameters.

However, sales growth and cash strength are not the absolute criteria for selecting stocks. So, we added a few other factors to arrive at a winning strategy.

Price-to-Sales (P/S) Ratio less than X-Industry : This metric measures the value placed on each dollar of a company's revenues. The lower the ratio, the better it is for picking a stock since the investor is paying less for each unit of sales.

% Change F1 Sales Estimate Revisions (4 Weeks) greater than X-Industry : Better-than-industry estimate revision has often been seen to trigger an increase in the stock price.

Operating Margin (Average Last 5 years) greater than 5% : Operating margin measures how much every dollar of a company's sales translates into profits. A high ratio indicates that the company has good cost control and sales are increasing faster than costs, an optimal situation for the company.

Return on Equity (ROE) greater than 5% : This metric will ensure that sales growth is being translated into profits and the company is not hoarding cash. A high ROE means the company is spending wisely and is in all likelihood profitable.

Zacks Rank less than or equal to 2 : Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform irrespective of the market environment.

Here are five of the 16 stocks that made it through the screen:

Teradyne, Inc. (NYSE: TER - Free Report ), based in North Reading, MA, is engaged in designing, developing, manufacturing, and selling automatic test equipment worldwide. The company has a long-term expected earnings per share (EPS) growth rate of 13.3% and sports a Zacks Rank #1.

WEX Inc. (NYSE: WEX - Free Report ) provides corporate payment solutions to a broad set of customers and partners with offices in the U.S., Australia, New Zealand, Brazil, the U.K., Italy, France, Germany, Norway and Singapore. The South Portland, ME-based company has a long-term expected EPS growth rate of 14.8% with a Zacks Rank #2.

UMB Financial Corporation (NASDAQ: UMBF - Free Report ), based in Kansas City, MO, is a financial holding company offering services including banking, payment solutions, asset servicing and institutional investment management. The company has a long-term expected EPS growth rate of 11% with a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Lam Research Corporation (NASDAQ: LRCX - Free Report ), based in Fremont, CA, is supplier of wafer fabrication equipment and services to the semiconductor industry worldwide. The company currently has a long-term expected EPS growth rate of 12.3% and carries a Zacks Rank #2.

Morgan Stanley (NYSE: MS - Free Report ) is a leading financial services holding company headquartered in New York. The company serves a diversified group of clients including corporations, governments, financial institutions and individuals through more than 1,200 offices across 43 countries. The company has a long-term expected EPS growth rate of 12.8% and carries a Zacks Rank #2.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today .

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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Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don't wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111

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.

About Screen of the Week

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Contact: Jim Giaquinto

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Teradyne, Inc. (TER): Free Stock Analysis Report

WEX Inc. (WEX): Free Stock Analysis Report

UMB Financial Corporation (UMBF): Free Stock Analysis Report

Lam Research Corporation (LRCX): Free Stock Analysis Report

Morgan Stanley (MS): Free Stock Analysis Report

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


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

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