6 High-Growth Services Stocks With Strong Sources Of Profitability

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 |  Includes: JBLU, NTSP, PCCC, SAVE, TFM, VSI
by: Kapitall

Do you prefer stocks expected to see high earnings growth? If so, we ran a screen you might be interested in. We began by screening the services sector for high-growth stocks, with 5-year projected EPS growth above 15%.

Then to analyze these companies' profitability, we ran DuPont analysis on the names. DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components:

ROE

= (Net Profit/Equity)

= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)

= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

Because increases in net margin and asset turnover are considered good things, DuPont focuses on companies with these positive characteristics: Increasing ROE along with,

•Decreasing leverage, (i.e. decreasing Asset/Equity ratio);

•Improving asset use efficiency (i.e. increasing Sales/Assets ratio);

•Improving net profit margin (i.e. increasing Net Income/Sales ratio).

Those companies that pass DuPont are seeing positive trends in the sources of their increasing profitability, which adds further weight to the idea that the names are profitable.

For an ‪interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.‬

Tool provided by Kapitall.

Do you think these stocks will meet their high-growth expectations? Use this list as a starting point for your own analysis.

List sorted by 5-year projected EPS growth.

1. JetBlue Airways Corporation (NASDAQ:JBLU): Provides passenger air transportation services in the United States. Market cap at $1.44B, most recent closing price at $5.08. 5-year projected EPS growth at 34.13%. MRQ net profit margin at 4.07% vs. 2.17% y/y. MRQ sales/assets at 0.179 vs. 0.167 y/y. MRQ assets/equity at 3.874 vs. 4.088 y/y.

2. PC Connection, Inc. (NASDAQ:PCCC): Operates as a direct marketer of various information technology solutions. Market cap at $328.94M, most recent closing price at $12.46. 5-year projected EPS growth at 25.00%. MRQ net profit margin at 1.63% vs. 1.46% y/y. MRQ sales/assets at 1.121 vs. 1.112 y/y. MRQ assets/equity at 1.683 vs. 1.714 y/y.

3. The Fresh Market, Inc. (NASDAQ:TFM): Operates as a specialty grocery retailer. Market cap at $2.9B, most recent closing price at $60.40. 5-year projected EPS growth at 22.02%. MRQ net profit margin at 5.93% vs. 5.1% y/y. MRQ sales/assets at 1.001 vs. 0.971 y/y. MRQ assets/equity at 2.199 vs. 3.158 y/y.

4. Spirit Airlines, Inc. (NASDAQ:SAVE): Provides passenger airline service primarily to leisure travelers and travelers visiting friends and relatives. Market cap at $1.47B, most recent closing price at $20.32. 5-year projected EPS growth at 21.45%. MRQ net profit margin at 9.99% vs. 6.13% y/y. MRQ sales/assets at 0.398 vs. 0.389 y/y. MRQ assets/equity at 1.649 vs. 1.71 y/y.

5. Netspend Holdings, Inc. (NASDAQ:NTSP): Provides general-purpose reloadable prepaid debit cards (GPR cards) and related alternative financial services to under banked consumers in the United States. Market cap at $703.86M, most recent closing price at $9.43. 5-year projected EPS growth at 20.94%. MRQ net profit margin at 11.91% vs. 10.19% y/y. MRQ sales/assets at 0.355 vs. 0.278 y/y. MRQ assets/equity at 1.52 vs. 1.581 y/y.

6. Vitamin Shoppe, Inc. (NYSE:VSI): Operates as a specialty retailer and direct marketer of nutritional products. Market cap at $1.6B, most recent closing price at $55.55. 5-year projected EPS growth at 20.22%. MRQ net profit margin at 7.36% vs. 5.34% y/y. MRQ sales/assets at 0.496 vs. 0.459 y/y. MRQ assets/equity at 1.323 vs. 1.511 y/y.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.