Top Stocks Have High Profit Potential.(A)(INVESTOR'S CORNER)

Byline: MONIKA TJIA

Sometimes it's better to focus on the present. But don't ignore a stock's potential. Before snapping up shares, make sure profit growth estimates are rosy as well.

Strong fundamentals are vital to a stock's performance. Pay special attention to stocks whose earnings per share have grown 25% or more a year for three straight years. Also look for strong earnings increases on a year-over-year basis in the past few quarters. Accelerating growth is a plus.

That's not all. Confirm that the company has the potential to keep growing its profit. That's a sign management is doing its job.

Estimates don't need to be gigantic. For stocks that are in the up-in-price portion of IBD's Where The Big Money's Flowing table, their earnings are estimated to grow 17% or more in the current fiscal year (18% for Nasdaq stocks).

You can find a stock's earnings estimates in IBD's sister publication, Daily Graphs, and financial Web sites such as yahoo.com and earningswhispers.com.

With the economy slumping, companies are revising profit forecasts lower on a near-daily basis. Corning, Nokia and EMC once churned out double- and triple-digit growth. Now they're predicting sharp declines in profit, or ...