ScreenShot: Two Stocks, Two Growth Stories

"ScreenShot" is a new story format that focuses on screen-based lists and companies that might be worth further research.

Volatile market conditions, like we are seeing currently, make it difficult for individual investors to keep control of their emotions and make logical investment decisions. Times like this make it important to look for solid companies that continue to grow earnings and sales, rather than some of the riskier plays one might make in less-complicated markets.

One of the ways to do this is by screening for stocks that meet fundamental or technical criteria that fits your investment profile and philosophy. In order to find the best opportunities, I look at a lot of fundamental data because I want to increase the odds that my choices will have a solid chance of increasing in price.

In today's screen, I am looking at companies with over $1 billion in market capitalization with strong earnings-per-share growth backed by healthy profit margins. This tells me that not only are the companies increasing earnings, but they are also putting plenty of money in their pocket.

I will also keep an eye on the price-to-sales ratio to make sure I am not paying too much for the sales that a company is generating. I like to keep that ratio under 2.

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American Eagle Outfitters

Two of the companies on this list caught my eye and may be worth further investigation by readers. The first is American Eagle Outfitters (AEO - commentary - Cramer's Take).

AEO is one of the largest specialty retailers targeting the young-adult demographic, and they are continuing to update stores and rapidly expand their lines to accommodate the appetites of generation X.

Retail sales numbers have been coming in strong already, and AEO should also benefit from the economic stimulus checks that will be arriving to consumers very soon. Their clothes continue to remain popular among teens and young adults who have the most discretionary income, and that is their primary target market.

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At time of publication, Manning had no positions in the stocks mentioned, although holdings can change at any time.

Mark Manning, AAMS, is an Accredited Asset Management Specialist and Registered Investment Advisor with Butler, Wick & Co., where he specializes in wealth management. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Manning appreciates your feedback; click here to send him an email.