In Search Of Higher Scores
Our search for standout stocks starts with the Quadrix Overall score, which considers more than 80 variables in six categories. But 526 stocks in our research universe earn Overall scores of 90 or higher, leaving plenty more work to find truly high-potential stocks. To further narrow the selection universe, we considered the trend in Overall scores. The paragraphs below review three solid picks with improving Quadrix charts and solid year-ahead growth potential.
Community Health Systems' ($52; CYH) Overall score is 84, up from 44 a year ago and well above the three-year average of 62. Much of that improvement stems from a surging Momentum score, which stands at 65, up from only 9 at the beginning of the year. Community Health, which operates nearly 200 hospitals in 29 states, offers solid growth at a reasonable price. In 2015, per-share earnings are expected to jump 24% on sales growth of 7%. Yet shares trade at 13 times estimated current-year earnings — a 25% discount to health-care facility stocks in the S&P 1500 Index. Community Health, capable of climbing 15% in the year ahead, is a Buy and a Long-Term Buy.
Shares of Goodyear Tire & Rubber ($29; GT) have retreated 11% from their Aug. 18 high, partly on concerns about weakness among China's automakers. But in August U.S. auto makers reported their strongest sales since July 2005. Moreover, improved cost controls and lower raw material costs should boost profit margins and help sustain earnings growth. Goodyear expects raw material prices to decline about 7% in 2015, with a bulk of that coming in the in the second half of the year. Per-share profits are expected to climb 9% this year and 23% in 2016. With an Overall score of 97, Goodyear ranks near the top 3% of U.S.-traded stocks. Shares score above 90 for Value and Quality, while Performance is a solid 72. Goodyear Tire & Rubber is a Long-Term Buy.
Nvidia's ($22; NVDA) Overall score of 93 ranks it No. 7 among the 94 semiconductor stocks in Quadrix. That score was 77 just a month ago. Quadrix category scores and profit estimates are on the rise, reflecting a strong June quarter and favorable margin trends. Notably, Earnings Estimates is an impressive 98, versus just 12 at the end of July. For fiscal 2016 ending January, Wall Street targets per-share earnings of $0.80, up from $0.76 a month ago. That figure could prove conservative given robust demand for high-end graphics chips for gaming machines. Nvidia is a Long-Term Buy.