3 Fundamental Outperformers

Let’s put all the hand-wringing about tariffs and interest rates to the side for just a minute.

Despite all these headlines, investors still need to find stocks with solid fundamentals. These are the stocks that will be able to really take advantage of a resolution on these issues (which is hopefully coming soon).   

So let’s take a look at a few Zacks Rank #1s (Strong Buys) that are outperforming the market right now and are showing enough momentum to continue rising in the future.

The Trade Desk, Inc. (TTD)

Buying ad space and hoping that it finds the right audience is as outdated as Don Draper smoking in his office. These days it’s all about being programmatic, or allowing automation to buy and sell advertising that gets the message to the right people at the right time and in the right way.

In other words, it targets the consumers most likely to respond rather than throwing it against the wall and seeing what sticks.

One of the major names in this evolution of advertising is The Trade Desk, Inc. (TTD), a technology company that empowers ad buyers to create, manage and optimize digital advertising campaigns across ad formats and devices through its self-service, cloud-based platform.

As part of the Internet Services space, TTD is in the top 28% of the Zacks Industry Rank.  

The company has made quite a splash in its relatively short time as a public company. The stock is up nearly 100% so far this year and has soared to over $200 from its IPO price of $18 in September 2016.

TTD has yet to miss the Zacks Consensus Estimate since going public. Most recently, it beat by 96% and has a four-quarter average of more than 50%.

Revenue of $121 million also topped our expectations while jumping 41% from last year.  

Big brands continue to divert advertising spending to TTD, which led the company to raise its revenue guidance for the year.

The past two months have seen earnings estimates for this year advance by 14.5%, while next year is up 10.5% in the same time. The Zacks Consensus Estimate of $3.59 for 2020 suggests year-over-year growth of 22.5%.

Rent-A-Center (RCII)  

After putting its terminated merger deal with Vintage Capital into the rear-view mirror, Rent-A-Center (RCII) promised to put its full attention toward its strategic plan to grow its business and enhance shareholder value.

It seems to be working!

This leader in the rent-to-own space has jumped more than 56% this year and beaten the Zacks Consensus Estimate for four straight quarters with an impressive average surprise of nearly 74%.

It beat by more than 96% in its most recent report with adjusted earnings of 59 cents soaring past our expectation of 30 cents.

Revenue of nearly $697 million also topped the Zacks Consensus. Perhaps more importantly though, same-store sales were up 6.8% for the ninth straight quarter of improvement.

Since the quarterly report, earnings estimates have taken a solid step forward. The Zacks Consensus Estimate of $2.12 for this year is up 11% in the past two months.

Analysts expect $2.45 for next year, which has advanced 7.5% in 60 days. It also suggests an improvement of more than 15% from the previous year.  

Looking forward, RCII will continue to focus on cost containment efforts, improving traffic trends, its refranchising program and augmenting cash low, among other goals.  

Hasbro, Inc. (HAS)

After a couple quarters of losses, iconic toymaker Hasbro, Inc. (HAS) triumphantly returned to profitability in its most recent report.

In fact, the maker of Nerf, Play-Doh and Monopoly – among countless other toys and games that you probably used to play – is the only Zacks Rank #1 (Strong Buy) company in the highly-ranked Toys-Games-Hobbies industry.

The space is in the top 29% of the Zacks Industry Rank with the 75th spot out of 256.  

HAS didn’t just tip-toe its way back into profitability in the first quarter, it plowed right through the Zacks Consensus Estimate like Optimus Prime with a beat of more than 362%. Earnings of 21 cents trounced expectations for an 8-cent loss.

Revenues of $732.5 million also topped our expectation of $674 million. The company is beginning to see improvement in its commercial markets, especially the US and Europe. In addition, its cost savings activities are helping the operating profit.

One of the company’s biggest brands is its Magic: The Gathering franchise. It also saw revenue gains from Monopoly, Play-Doh and Transformers.

Earnings estimates haven’t moved much in the past couple of months. However, they are up from three months ago in response to this solid quarter.

The Zacks Consensus Estimate for this year is up nearly 5% from 90 days ago to $4.53. It’s up 3% to $5.11 for next year.

Most importantly moving forward, analysts expect 2020 earnings to improve nearly 13% for this year.

We’ll see if HAS can make it two in a row when they report again on July 22. At the moment, it has a positive Earnings ESP of nearly 2%.

These stocks were found using the Quality Fundamental Outperformers premium screen, which search for Zacks Rank #1 (Strong Buy) stocks with a Zacks Style Score of “A” for Momentum and in the top 50% of Zacks Ranked Industries. In other words, it looks for stocks that are outperforming the market.

Click here to take a look at the parameters of this screen and the stocks that have passed the test. 

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don’t buy now, you may kick yourself in 2020. 

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The Trade Desk Inc. (TTD): Free Stock Analysis Report
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