3 Reasons Growth Investors Will Love Zoom (ZM)

Core Viewpoint - Growth investors are increasingly focused on identifying stocks with above-average financial growth, which can lead to significant returns, but this task is challenging due to inherent risks and volatility associated with such stocks [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - Zoom Communications (ZM) is currently highlighted as a recommended stock due to its favorable Growth Score and top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is crucial for growth investors, with double-digit growth being highly desirable as it indicates strong future prospects [4] - Zoom's projected EPS growth for this year is 106.4%, significantly surpassing the industry average of 101.7% [5] Group 3: Cash Flow Growth - Higher-than-average cash flow growth is essential for growth-oriented companies, allowing them to expand without relying on external funding [6] - Zoom's year-over-year cash flow growth stands at 15.8%, compared to an industry average of -17.3% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 75.5%, well above the industry average of 15.2% [7] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements, making them a valuable metric for investors [8] - Recent upward revisions in current-year earnings estimates for Zoom have led to a 5.5% increase in the Zacks Consensus Estimate over the past month [9] Group 5: Overall Positioning - Zoom has achieved a Growth Score of B and a Zacks Rank of 2, indicating strong potential for outperformance based on the discussed factors [11]