Here’s Why Growth Investors Should Buy Entegris (ENTG) Now

gEmerging investors focus on stocks that are experiencing above-average financial growth, as this characteristic helps these stocks capture market attention and generate strong returns. However, finding great growth value is not easy.

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

However, the task of finding peak growth stocks is made easier using the Zacks Growth Style Score (part of the Zacks Style Sheet Music system), which goes beyond traditional growth attributes to analyze a company’s real growth prospects.

Our proprietary system currently recommends Entegris (ENTG) as one of these stocks. This company not only has a favorable growth score but also a top Zacks ranking.

Studies have shown that stocks with the best growth characteristics consistently outperform the market. And for stocks that have a combination of a growth score of A or B and a Zacks rank of No. 1 (strong buy) or 2 (buy), the returns are even better.

While there are many reasons why this manufacturer’s stock of equipment used in chip manufacturing is a great choice for growth right now, we’ve highlighted three of the most important factors below:

Profit growth

Earnings growth is arguably the most important factor, as stocks with exceptionally high levels of profit tend to capture the attention of most investors. For growth-oriented investors, double-digit earnings growth is highly preferable, as it is often seen as an indication of strong prospects (and share price gains) for the company in question.

While the historical EPS growth rate for Entegris is 23.5%, investors should actually focus on projected growth. The company’s EPS is expected to grow 24.5% this year, beating the industry average, which forecasts EPS growth of 3.3%.

Impressive asset utilization ratio

Growth investors often overlook the asset utilization ratio, also known as the sales to total assets (S/TA) ratio, but it is an important characteristic of a true growth stock. This metric shows how effectively a business uses its assets to generate sales.

Currently, Entegris has an S/TA ratio of 0.79, which means the company gets $0.79 in sales for every dollar in assets. Comparing this to the industry average of 0.7, it can be said that the company is more efficient.

In addition to efficiency in generating sales, sales growth plays an important role. And Entegris is also well positioned from a sales growth perspective. The company’s sales are expected to rise 16.9% this year versus an industry average of 7.1%.

Revisions to Promising Earnings Estimates

Beyond the parameters outlined above, investors should consider the trend of earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

There have been upward revisions to current year earnings estimates for Entegris. The Zacks consensus estimate for the current year jumped 2.9% over the past month.


Entegris not only earned a growth score of A based on a number of factors, including those discussed above, but it also carries a Zacks rank of No. 2 due to positive earnings estimate revisions.

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

This combination indicates that Entegris is a potential outperformer and a solid choice for growth investors.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.