Today’s recommendation is a stock with strong momentum from Ford Equity Research.
“EnerSys (ENS, $39) is a manufacturer, marketer and distributor of industrial batteries. The company also manufactures, markets and distributes related products such as chargers, power equipment and battery accessories, and it provides related after-market and customer-support services for industrial batteries. The company markets and sells its products globally to customers in more than 100 countries. ... We project that EnerSys will strongly outperform the market over the next six to 12 months. This projection is based on our analysis of three key factors that influence common stock performance: earnings strength, relative valuation, and recent price movement. ...
“Earnings strength is very positive. The company has enjoyed a very positive trend in earnings per share over the past five quarters and while recent estimates for the company have been raised by analysts, ENS has posted better-than-expected results. Ford’s earnings momentum measures the acceleration or deceleration in trailing 12 month operating earnings per share growth. The upward curvature of the plotted points in the graph below indicates that while Enersys’s earnings have increased from $2.73 to an estimated $3.61 over the past five quarters, they have shown strong acceleration in quarterly growth rates when adjusted for the volatility of earnings. This indicates an improvement in future earnings growth may occur. ...
“Relative valuation is very positive. Enersys’s operating earnings yield of 9.7% ranks above 86% of the other companies in the Ford universe of stocks, indicating that it is undervalued. [Finally,] price movement is very positive. Enersys’s stock price is up 65.8% in the last 12 months, up 12.9% in the past quarter and up 9.1% in the past month. This historical performance should lead to above average price performance in the next one to three months. Strong Buy.”
- Richard Segarra, Ford Equity Research Report, August 31, 2012