Saturday, December 3, 2022
Home Business Funding Looking for a Growth Stock? 3 Reasons Why Infineon Technologies AG (IFNNY)...

Looking for a Growth Stock? 3 Reasons Why Infineon Technologies AG (IFNNY) is a Solid Choice

This story originally appeared on Zacks

Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market’s attention and deliver solid returns. But finding a growth stock that can live up to its true potential can be a tough task.

– Zacks

In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.

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

Infineon Technologies AG (IFNNY) is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank.

Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).

While there are numerous reasons why the stock of this company is a great growth pick right now, we have highlighted three of the most important factors below:

Earnings Growth

Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for Infineon Technologies AG is 2.8%, investors should actually focus on the projected growth. The company’s EPS is expected to grow 34.5% this year, crushing the industry average, which calls for EPS growth of 27%.

Cash Flow Growth

While cash is the lifeblood of any business, higher-than-average cash flow growth is more important and beneficial for growth-oriented companies than for mature companies. That’s because, growth in cash flow enables these companies to expand their businesses without depending on expensive outside funds.

Right now, year-over-year cash flow growth for Infineon Technologies AG is 101.6%, which is higher than many of its peers. In fact, the rate compares to the industry average of 12.6%.

While investors should actually consider the current cash flow growth, it’s worth taking a look at the historical rate too for putting the current reading into proper perspective. The company’s annualized cash flow growth rate has been 14.5% over the past 3-5 years versus the industry average of 10.8%.

Promising Earnings Estimate Revisions

Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

There have been upward revisions in current-year earnings estimates for Infineon Technologies AG. The Zacks Consensus Estimate for the current year has surged 4.7% over the past month.

Bottom Line

While the overall earnings estimate revisions have made Infineon Technologies AG a Zacks Rank #2 stock, it has earned itself a Growth Score of A based on a number of factors, including the ones discussed above.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

This combination indicates that Infineon Technologies AG is a potential outperformer and a solid choice for growth investors.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +25.4% per year.

These 7 were selected because of their superior potential for immediate breakout. 

See these time-sensitive tickers now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Infineon Technologies AG (IFNNY): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Most Popular

Canada’s men’s national soccer team has lessons to learn after long-awaited return to World Cup

The Canadian men leave the World Cup with “our heads up,” according to coach John Herdman. They also exit the world stage without a...

Air quality in hundreds of Quebec classrooms receives failing grade

Quebec’s new education minister is focusing his efforts on air quality in schools. Bernard Drainville says he’s frustrated with the lack of improvement in...

Winnipeg police chief says homicide victims’ bodies likely at landfill, but no plans to search

By The Staff The Canadian Press Posted December 2, 2022 6:07 pm Updated December 2, 2022 6:41 pm Descrease article font...

Customer service setbacks behind Pascan flight pause in Kingston, Ont.

Customer service issues related to connecting flights and network access are behind this week’s announcement that Pascan Aviation flights to and from Montreal will...