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Persistent earnings growth captivates almost everyone, from the top brass to research analysts. This is because earnings are a measure of the money a company is making.

Still, earnings acceleration works even better when lifting the stock price. Studies have shown that most successful stocks have seen an acceleration in earnings before an uptick in the stock price.

Earnings acceleration is the incremental growth in a company’s earnings per share (EPS). In other words, if the rate of a company’s quarter-over-quarter earnings growth increases within a stipulated frame of time, it can be called earnings acceleration.

In the case of earnings growth, you pay for something that is already reflected in the stock price. But earnings acceleration helps spot stocks that haven’t yet caught the attention of investors and, once secured, will invariably lead to a rally in the share price. This is because earnings acceleration considers both the direction and magnitude of growth rates.

An increasing percentage of earnings growth means that the company is fundamentally sound and has been on the right track for a considerable period. Meanwhile, a sideways percentage of earnings growth indicates a period of consolidation or slowdown, while a decelerating percentage of earnings growth may drag prices down.

Screening Parameters

Look at stocks for which the last two quarter-over-quarter percentage EPS growth rates exceed the previous periods' growth rates. The projected quarter-over-quarter percentage EPS growth rates are also expected to be higher than the previous periods’ growth rates.

EPS % Projected Growth (Q1)/(Q0) greater than EPS % Growth (Q0)/(Q-1): The projected growth rate for the current quarter (Q1) over the completed quarter (Q0) has to be greater than the growth rate from the completed quarter (Q0) over one quarter ago (Q-1).

EPS % Growth (Q0)/(Q-1) greater than EPS % Growth (Q-1)/(Q-2): The growth rate for the completed quarter (Q0) over one quarter ago (Q-1) has to be greater than the growth rate from one quarter ago (Q-1) over two quarters ago (Q-2).

EPS % Growth (Q-1)/(Q-2) greater than EPS % Growth (Q-2)/(Q-3): The growth rate from one quarter ago (Q-1) over two quarters ago (Q-2) has to be greater than the growth rate from two quarters ago (Q-2) over three quarters ago (Q-3).

In addition to this, we have added the following parameters:

Current Price greater than or equal to $5: This screens out low-priced stocks.

Average 20-day volume greater than or equal to 50,000: High trading volume implies that the stocks have adequate liquidity.

The above criteria narrowed the universe of around 7,735 stocks to only four. Here are the stocks:

AxoGen AXGN develops surgical solutions for peripheral nerves. AxoGen currently has a Zacks Rank #2 (Buy). AXGN’s expected earnings growth rate for the current year is 46.7%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Western Digital WDC is a leading developer and manufacturer of data storage devices and solutions based on NAND flash and hard disk drive technologies. Western Digital currently has a Zacks Rank #1. WDC’s expected earnings growth rate for the current year is 32.9%.

Accolade ACCD provides personalized, technology-enabled solutions that help people better understand, navigate and utilize the healthcare system. Accolade currently has a Zacks Rank #2. ACCD’s expected earnings growth rate for the current year is 78.3%.

Credo Technology Group CRDO is a provider of high-performance serial connectivity solutions for the hyperscale data center, 5G carrier, enterprise networking, artificial intelligence and high-performance computing markets. Credo Technology currently has a Zacks Rank #2. CRDO’s expected earnings growth rate for the current year is 40%.

You can sign up now for your 2-week free trial to the Research Wizard and start using this screen in your trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.