Is Yelp (YELP) a Solid Growth Stock? 3 Reasons to Think "Yes"

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 growth stock that can live up to its true potential can be a tough task.By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.However, the task of finding cutting-edge growth stocks is made easy with the help of 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.Our proprietary system currently recommends Yelp (YELP) 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 returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).While there are numerous reasons why the stock of this online business reviews company is a great growth pick right now, we have highlighted three of the most important factors below: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 Yelp is 42.6%, investors should actually focus on the projected growth. The company's EPS is expected to grow 33.6% this year, crushing the industry average, which calls for EPS growth of 25.5%.Impressive Asset Utilization RatioAsset utilization ratio -- also known as sales-to-total-assets (S/TA) ratio -- is often overlooked by investors, but it is an important indicator in growth investing. This metric exhibits how efficiently a firm is utilizing its assets to generate sales.Right now, Yelp has an S/TA ratio of 1.41, which means that the company gets $1.41 in sales for each dollar in assets. Comparing this to the industry average of 0.66, it can be said that the company is more efficient.While the level of efficiency in generating sales matters a lot, so does the sales growth of a company. And Yelp is well positioned from a sales growth perspective too. The company's sales are expected to grow 4.8% this year versus the industry average of 0%.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 Yelp. The Zacks Consensus Estimate for the current year has surged 3.8% over the past month.Bottom LineWhile the overall earnings estimate revisions have made Yelp a Zacks Rank #2 stock, it has earned itself a Growth Score of B based on a number of factors, including the ones discussed above.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.This combination positions Yelp well for outperformance, so growth investors may want to bet on it.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. This aggressive transition could mean tremendous profits for nuclear-related stocks – and investors who get in on the action early enough.Our urgent report, Atomic Opportunity: Nuclear Energy's Comeback, explores the key players and technologies driving this opportunity, including 3 standout stocks poised to benefit the most.Download Atomic Opportunity: Nuclear Energy's Comeback free today.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 Yelp Inc. (YELP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks