This shipbuilding company is also ranked a ‘Strong Buy’ by Zacks, based on impressive earnings revisions (up $0.88), sales, dividend and EPS growth.
Huntington Ingalls Industries Inc (HII)
From Validea Hot List Newsletter
Strategy: Growth/Value Investor
Based on: James P. O’Shaughnessy
Huntington Ingalls Industries, Inc. (HII) is a military shipbuilding company and a provider of professional services to partners in government and industry. The company’s business consists of the design, construction, repair and maintenance of nuclear-powered ships and non-nuclear ships for the United States Navy and coastal defense surface ships for the United States Coast Guard, as well as the refueling and overhaul and inactivation of nuclear-powered ships for the United States Navy. It operates through three segments: Ingalls Shipbuilding (Ingalls), Newport News Shipbuilding (Newport News) and Technical Solutions. Its Ingalls segment includes its non-nuclear ship design, construction, repair and maintenance businesses. Its Newport News includes all of its nuclear ship design, construction, overhaul, refueling, and repair and maintenance businesses. Its Technical Solutions segment provides a range of professional services to the governmental, energy, and oil and gas markets.
MARKET CAP: PASS: Strategy is that the company has a market capitalization of at least $150 million. HII, with a market cap of $9,622 million, passes this criterion.
EARNINGS PER SHARE PERSISTENCE: PASS: The Cornerstone Growth methodology looks for companies that show persistent earnings growth without regard to magnitude. To fulfill this requirement, a company’s earnings must increase each year for a five year period. HII, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were 2.91, 5.18, 6.86, 8.36 and 12.14, passes this test.
PRICE/SALES RATIO: PASS: The Price/Sales ratio should be below 1.5. This value criterion, coupled with the growth criterion, identify growth stocks that are still cheap to buy. HII’s Price/Sales ratio of 1.36, based on trailing 12 month sales, passes this criterion.
RELATIVE STRENGTH: PASS: The final criterion for the Cornerstone Growth Strategy requires that the Relative Strength of the company be among the top 50 of the stocks screened using the previous criterion. This gives you the opportunity to buy the growth stocks you are searching for just as the market is embracing them. HII, whose relative strength is 81, is in the top 50 and would pass this last criterion.
John Reese, Validea Hot List Newsletter, www.validea.com, 877-439-0506, March 24, 2017