Is Booz Allen (BAH) a Solid Growth Stock? 3 Reasons to Think ” Yes “

This story originally appeared on Zacks

Growth investors focus on stocks with above-average financial growth, as this feature helps these securities attract market attention and generate solid returns. But finding a growth stock that can live up to its true potential can be a challenging task.

– Zacks

By their nature, these stocks carry above-average risks and volatility. Moreover, if the company’s growth story is over or nearing completion, betting on it can result in a big loss.

However, it is very easy to find high-end growth stocks with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond traditional growth attributes to analyze the company’s real growth prospects.

Booz Allen Hamilton (BAH) is one such stock that our proprietary system currently recommends. Not only does the company have favorable growth points, but it also holds the highest Zacks rating.

Research shows that stocks with the best growth features consistently outperform the market. The returns are better for stocks with a combination of A or B growth points and Zacks ranked #1 (strong buy) or 2 (buy).

While there are many reasons why this defense contractor stock is a great pick for growth right now, we’ve highlighted three of the most important factors below:

profit growth

It can be said that there is nothing more important than earnings growth, as higher levels of profit are what most investors strive for. And for growth investors, double-digit earnings growth is definitely the best, and is often an indication of the strong outlook (and stock price gains) for the company under consideration.

While Booz Allen’s historical EPS growth rate is 22.4%, investors should really focus on the expected growth. The company’s EPS is expected to grow 9% this year, crushing the industry average, which requires 8% EPS growth.

Incredible Asset Utilization Ratio

Growth investors often overlook the asset utilization ratio, also known as the sales to total assets (S/TA) ratio, but it is an important feature of real growth stocks. This metric shows how efficiently a company is using its assets to generate sales.

Currently, Booz Allen has an S/TA ratio of 1.39, which means the company gets $1.39 in sales for every dollar of assets. Comparing this to the industry average of 1.31, the company can be said to be more efficient.

While the level of efficiency in generating sales is very important, so is the company’s sales growth. And Booz Allen is well positioned from a sales growth perspective, too. The company’s sales are expected to grow 8.2% this year versus the industry average of 6%.

Promising Reviews Income Estimate

Stock outperformance in terms of the metrics described above can be validated by looking at the trend in earnings estimate revisions. The positive trend is of course favorable here. Empirical research shows that there is a strong relationship between trends in earnings estimates reviews and near-term stock price movements.

There have been upward revisions to Booz Allen’s current year earnings estimates. The current year’s Zacks consensus estimate is up 0.1% over the past month.

minimum

While overall earnings estimate reviews put Booz Allen’s Zacks stock in the No. 2, it has a growth grade of A based on a number of factors, including those discussed above.

You can see the full list of Zacks #1 stocks (strong buy) today here.

This combination indicates that Booz Allen is a potential outperformer and a solid choice for growth investors.

Zacks Top 10 Stocks of 2022

In addition to the investment ideas discussed above, would you like to learn about our top 10 picks for the whole of 2022?

Since its inception in 2012 until November, it has been Zacks Top 10 Stocks Gained an impressive +962.5% against the +329.4% of the S&P 500. Now our Research Director is combing the 4,000 companies included in the Zacks Rank to choose the top 10 indices to buy and hold. Don’t miss your chance to grab these shares when they are released on January 3.

Be the first to get the top 10 new shares >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 of the best stocks for the next 30 days. Click for this free report

Booz Allen Hamilton Holding Corporation (BAH): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

.

Leave a Comment