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Zacks.com Featured Highlights: Activision Blizzard, Teleflex, J2 Global, Heartland Financial And DuPont Fabros Technology

Published 08/18/2016, 09:30 PM
Updated 07/09/2023, 06:31 AM

For Immediate Release

Chicago, IL – August 19, 2016 - Stocks in this week’s article include: Activision Blizzard (NASDAQ:ATVI), Inc. (ATVI), Teleflex Incorporated (TFX), j2 Global, Inc. (JCOM), Heartland Financial USA, Inc. (HTLF) and DuPont (NYSE:DD) Fabros Technology, Inc. ( DFT).

Screen of the Week of Zacks Investment Research:

Bet on These 5 GARP Stocks to Derive High Yields

Growth at a reasonable price or GARP strategy is ideal for investors looking to enrich their portfolio by investing in stocks that have the potential to provide both value and growth investing. This strategy is best suited for an environment where major benchmarks are witnessing a strong rebound in the latter half of a particular time frame after plunging in the first half.

Investors following a blend strategy seek to invest in both value and growth stocks while those adopting GARP try to find stocks that are undervalued as well as have impressive growth prospects. Thus it may prove to be fruitful to follow the GARP strategy in order to build a profitable portfolio.

GARP: Best of Value & Growth Investing

Though investors following GARP consider popular metrics of both value and growth investing, the ideal range of these metrics are different from what value and growth investing consider. GARP investing employs popular value metrics – price-to-earnings (P/E) and price-to-book value (P/B) ratio – to evaluate whether a stock is undervalued or not.

In case of P/E ratio, investors following the GARP strategy look for a higher value of the ratio compared to value investors. However, they avoid picking companies with extremely high price-to-earnings ratios. On the other hand, like value investors, GARP investors give precedence to low P/B ratios. A ratio less than the industry average is preferred by GARP investors for choosing undervalued stocks.

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The other metrics that are borrowed by GARP investors from the growth investing strategy are strong earnings growth history and impressive earnings growth prospects in the coming years. Unlike growth investors, GARP investors look for stocks with a more stable and reasonable growth rate instead of choosing those with extremely high growth rates. Growth rates between 10% and 20% are considered ideal in GARP strategy.

Return on equity (ROE) is another growth metric used in GARP strategy. This strategy considers those stocks that have higher ROE compared to the industry average as strong ROE is an indicator of superior stocks.

In order make the most of the GARP strategy, we have only considered stocks with a favorable Zacks Rank.

Screening Parameters

• Zacks Rank less than or equal to #2
(Only Strong Buy and Buy rated stocks can get through.)

Last 5-year EPS & projected 3–5 year EPS growth rate between 10% and 20%
(Strong EPS growth history and prospects ensure improving business.)

ROE (over the past 12 months) greater than the industry average
(Higher ROE compared to the industry average indicates superior stocks.)

P/E and P/B ratios less than X-industry average
(P/E and P/B ratios less than that of the industry average indicates that the stocks are undervalued.)

Using these criteria we’ve narrowed down the universe of over 7,700 stocks to only 5.

Here are the five stocks that passed our screening criteria:

Activision Blizzard, Inc. (ATVI) is a worldwide pure-play online and console game publisher with leading market position across all categories of the rapidly growing interactive entertainment software industry. In addition to a Zacks Rank #2 (Buy), Activision Blizzard has an average four-quarter positive earnings surprise of 33.5%.

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Teleflex Incorporated (TFX) is primarily engaged in manufacturing, developing and supplying medical devices for different procedures in the medical industry throughout the globe. This Zacks Rank #2 stock has an average four-quarter positive earnings surprise of 7.1%.

j2 Global, Inc. (JCOM) provides cloud-based communications and storage messaging services. In addition to a Zacks Rank #2, j2 Global also has an average four-quarter positive earnings surprise of 5.9%.

Heartland Financial USA, Inc. (HTLF) is a multi-bank holding company that provides full-service retail banking through bank subsidiaries. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 11%.

DuPont Fabros Technology, Inc. (DFT) is a leading owner, developer, operator and manager of wholesale data centers and a real estate investment trust. In addition to a Zacks Rank #2, DuPont Fabros Technology also has an average four-quarter positive earnings surprise of 0.4%.

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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.

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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.


About Screen of the Week

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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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ACTIVISION BLZD (ATVI): Free Stock Analysis Report

TELEFLEX INC (TFX): Free Stock Analysis Report

J2 GLOBAL INC (JCOM): Free Stock Analysis Report

HEARTLAND FINCL (HTLF): Free Stock Analysis Report

DUPONT FABROS (DFT): Free Stock Analysis Report

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