Second-quarter 2026 earnings have been broadly encouraging, with many companies surpassing expectations and delivering stronger growth. Still, investment decisions should extend beyond near-term earnings performance. Investors should also evaluate the broader macroeconomic environment and consider how prevailing economic and industry trends may affect a company’s fundamentals, competitive position and long-term growth potential.
In such a situation, the traditional way of selecting stocks is a good idea. Sales growth provides a more reliable basis for evaluating stocks compared with earnings-focused metrics. In this regard, stocks like DICK'S Sporting Goods, Inc. DKS, Motorola Solutions, Inc. MSI and The Goldman Sachs Group, Inc. GS are worth betting on.
Sales growth is one of the most reliable measures of a company’s underlying business momentum. Although numerous factors can influence earnings, revenues provide a clearer indication of customer demand and a firm’s ability to increase product or service volumes. Steady sales growth may reflect favorable industry trends, market-share gains, pricing power, successful product introductions, or expansion into new geographies and customer segments.
Higher revenues can also provide a stronger foundation for improved profitability. As sales rise, companies may spread fixed costs over a broader revenue base, enhancing operating leverage and helping margins expand. However, sales growth should not be evaluated on its own. Its significance increases when considered alongside industry conditions, competitor performance, pricing trends, customer mix and the broader economic backdrop.
The quality and sustainability of revenue growth are equally important. Recurring revenues, repeat purchases, volume-led gains and durable demand generally carry more weight than growth driven by temporary factors. Companies that consistently generate dependable, high-quality sales growth across varying market environments are typically better placed to deliver stable cash flows, finance expansion, reinforce competitive advantages and generate sustainable shareholder returns.
Selecting the Potential Winning Stocks
To shortlist stocks with impressive sales growth and a high cash balance, we have selected 5-Year Historical Sales Growth (%) greater than X-Industry and Cash Flow of more than $500 million as our main screening parameters.
But sales growth and cash strength are not the absolute criteria for selecting stocks. Hence, we have added other factors to arrive at a winning strategy.
P/S Ratio less than X-Industry: This metric determines the value placed on each dollar of a company’s revenues. The lower the ratio, the better it is for picking a stock since the investor is paying less for each unit of sales.
% Change F1 Sales Estimate Revisions (four weeks) greater than X-Industry: Estimate revisions, better than the industry, are often seen to trigger an increase in stock price.
Operating Margin (average last five years) greater than 5%: The operating margin measures how much every dollar of a company's sales translates into profits. A high ratio indicates that the company has good cost control and sales are increasing faster than costs — an optimal situation.
Return on Equity (ROE) greater than 5%: This metric will ensure that sales growth is translated into profits and the company is not hoarding cash. A high ROE means that the company is spending wisely and is, in all likelihood, profitable.
Zacks Rank less than or equal to 2: Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform, irrespective of the market environment. You can see the complete list of today’s Zacks #1 Rank stocks here.
3 Stocks With Solid Sales Growth to Invest in
Based in Coraopolis, PA, DICK'S Sporting operates as a major omnichannel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment. DKS offers these items through a blend of associates, in-store services and unique specialty shop-in-shops.
DICK'S Sporting expected sales growth rate for fiscal 2027 is 50.4%. It carries a Zacks Rank #2 at present.
Based in Chicago, IL, Motorola is a leading communications equipment manufacturer and has strong market positions in bar code scanning, wireless infrastructure gear and government communications. MSI operates through two segments: Products and Systems Integration and Software and Services.
MSI’s expected sales growth rate for 2026 is 10.4%. Motorola currently carries a Zacks Rank #2.
Headquartered in New York, Goldman is a well-known global investment bank. GS provides IB, securities, investment management and consumer banking services to a diversified client base.
Goldman’s sales are expected to rise 19.4% in 2026. GS sports a Zacks Rank #1 at present.
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The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
DICK'S Sporting Goods, Inc. (DKS): Free Stock Analysis Report
Motorola Solutions, Inc. (MSI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).