Can Continued Growth Fuel Central European Media Enterprises Ltd. (NASDAQ:CETV) To Reach New Levels?

Central European Media Enterprises Ltd. (NASDAQ:CETV) shares have been experiencing accelerated earnings and sales growth over the past five years.  Over that time frame the firm has seen earnings growth of 16.20% and sales growth of 2.10%.

For any technician, the trend is a major aspect of stock trading. The trend is the dominant movement in direction of a stock’s price. When discussing the trend in terms of stock price, the assumption is that the trend is expected to continue over a certain period of time. Obviously there is no guarantee that a defined trend will continue, but technical analysts will scour the charts looking for signs of a developed trend to help make the best possible decisions. Seasoned chart watchers are typically able to spot if a trend is up, down, or sideways. Learning how to trade the trend is another part of the process that traders may spend years perfecting.  

While the firm has enjoyed the upward movement, it’s important to look at analyst expectations and where the company is headed from here.  On a consensus basis, analysts are projecting EPS growth of 29.73% for next year and have a $2.90 one year price target on the stock.   The stock recently traded at $4.11.

 Six Fundamental Characteristics of Great Growth Stocks

#6 Huge Mass Markets – The more potential customers there are, the greater the possibility that both the company, and the investment in said company, will be a success. 

#5 Market Dominance/Barriers to Entry – Look for companies who hold patents.  This is great barrier to entry, ensuring no competition.  Look for companies who dominate the market, blowing away the competition, though market dominance can be harder to measure. 

#4 Accelerating Earnings Growth – If a company’s earnings growth rate increases for two consecutive quarters, their growth is accelerating.  Faster growth is better growth, and a company whose earnings growth rate is accelerating is an attractive investment.

#3 Triple-Digit Revenue Growth – Companies growing their revenues at triple-digit rates (100% or better) are usually smaller and less known, making them attractive for buying by institutions. 

#2 High Profit Margins – In recent decades, high-margin stocks have beaten low-margin stocks by a huge amount. 

#1 Top Notch, Innovative Management – All great managers who led their companies to success usually did so by thinking differently.  There is no surefire and quick measurement of management talent.  When you find a top manager, one with a record of prior success and accolades, you should strike.  Top managers usually find a way to overcome obstacles. 

Let’s take a look at how the stock has been performing recently.  Over the past twelve months, Central European Media Enterprises Ltd. (NASDAQ:CETV)‘s stock was 48.92%.  Over the last week of the month, it was -0.24%, 28.17% over the last quarter, and  23.21% for the past six months. 

Central European Media Enterprises Ltd. (NASDAQ:CETV)’s EPS is 0.25.  Last year, their EPS growth was 112.30% while their EPS growth over the past five years is 16.20%.  Analysts are predicting Central European Media Enterprises Ltd.’s stock to grow 29.73% over the next year and 5.00% over the next five.

Even for seasoned investors, it can be natural to become wary when certain stocks are tanking in the stock portfolio. The knee jerk reaction can be to immediately change up the portfolio mix to help rectify the situation. Sometimes changes may need to be made, but often times, resisting the urge to make changes based on temporary downturns may prove to help the longer-term health of the stock portfolio. Investors may find themselves in the same predicament when markets are heading higher and every stock seems to be a winner. The impulse might be to double down and buy even more shares of a name that has been over performing recently. Once again, sometimes this may work out, but there will also be times when stocks have finished the run and adding to the position may end up nullifying previous gains if momentum swings back the other way.

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