3 Reasons Why Gorman-Rupp (GRC) Is a Great Growth Stock

Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all.In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks.Our proprietary system currently recommends Gorman-Rupp (GRC) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.Studies have shown that stocks with the best growth features consistently outperform the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better.Here are three of the most important factors that make the stock of this pump maker a great growth pick right now.Earnings GrowthArguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.While the historical EPS growth rate for Gorman-Rupp is 8.7%, investors should actually focus on the projected growth. The company's EPS is expected to grow 13.7% this year, crushing the industry average, which calls for EPS growth of 6.4%.Cash Flow GrowthWhile cash is the lifeblood of any business, higher-than-average cash flow growth is more important and beneficial for growth-oriented companies than for mature companies. That's because, growth in cash flow enables these companies to expand their businesses without depending on expensive outside funds.Right now, year-over-year cash flow growth for Gorman-Rupp is 19.3%, which is higher than many of its peers. In fact, the rate compares to the industry average of 1.3%.While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 10.6% over the past 3-5 years versus the industry average of 8.5%.Promising Earnings Estimate RevisionsBeyond the metrics outlined above, investors should consider the trend in 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 near-term stock price movements.There have been upward revisions in current-year earnings estimates for Gorman-Rupp. The Zacks Consensus Estimate for the current year has surged 0.5% over the past month.Bottom LineGorman-Rupp has not only earned a Growth Score of B based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.This combination indicates that Gorman-Rupp is a potential outperformer and a solid choice for growth investors.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Gorman-Rupp Company (The) (GRC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks