How To: Find Profitable, High-Growth Stocks

Wed Jun 15, 2022, 12:09 pm | by Azhar Khan | No comments

If you’re trying to find stocks with a low PEG ratio and high-profit margin, this how-to guide is for you! With just a few clicks, you can generate a list of these profitable, high-growth stocks. Go step-by-step to learn how to do this in Benzinga Pro

Low PEG and High-Profit Margin 

Let’s just start with what a PEG ratio is. PEG ratio is the price/earnings to growth ratio. It is calculated by dividing the price-to-earnings ratio by the growth rate of earnings. 

The price to earnings (PE) ratio is the current stock price divided by the earnings per share. 

PEG ratio can be used to factor in the expected earnings growth into a stock’s value. Investopedia states that “the lower the PEG ratio, the more the stock may be undervalued given its future earnings expectations.” 

The profit margin is calculated by dividing the company’s profit (sales minus expenses) by revenue. Presented as a percentage, it shows how well a company handles its finances. A high-profit margin means the company makes a higher amount of profit per sale. 

How to Find Profitable, High Growth Stocks in Benzinga Pro 

It only takes a few clicks to find low PEG/high-profit margin stocks in Benzinga Pro. Start with a blank workspace, and add a Screener tool. 

Then, you’ll set up the filters. 

Find the PEG filter and search for stocks with the ratio Low <1. This is a preset in the tool, and will only display stocks with a PEG ratio under 1. 

Next, you will want to filter even further and find stocks with a high profit margin—meaning they have cash flow and are profitable. If it’s not already, add profit margin to your columns by selecting Net Profit Margin in the columns tool to the right. 

Next, look for the Profit M filter in the Screener, and select the preset of High >20%

Now, you have a filtered list of all companies that have a low PEG ratio and high profit margin percentage. How you use this list will depend on your trading strategy, but is a great starting point to work from. 

Create a Watchlist of Profitable, High Growth Stocks

Then, you’ll want to create a Watchlist so you can not only keep tabs on the stocks but also filter other tools like Signals, Calendar and Newsfeed if you wish. 

To create a Watchlist, start by opening the tool in the same workspace. 

In the Screener, click on the export to CSV button and open the file. Open the CSV file and copy the list of tickers symbols and paste them into your Watchlist. From here, Benzinga’s Senior Vice President Steven Orr recommends sorting by volume so you can keep tabs on what is moving throughout the day. 

Now, you can filter Newsfeed, Signals and Calendar by your Watchlist

Final Thoughts 

Low PEG ratios and high-profit margins can help you find profitable, high growth stocks. If this is in your trading strategy, Benzinga Pro can help you find them in just a few clicks. Start a free trial to try it for yourself! 

Disclaimer: Benzinga is a news organization and does not provide financial advice and does not issue stock recommendations or offers to buy stock or sell any security. Benzinga Pro is for informational purposes and should not be viewed as recommendations. Benzinga Pro will never tell you whether to buy or sell a stock. It will only inform your trading decisions. You can find our full disclaimer located here.