Want Growth? These 2 Dow Stocks Have It

Revenue growth has been hard to come by, but these stocks have plenty of it.

Apr 26, 2014 at 11:03AM

The Dow Jones Industrials (DJINDICES:^DJI) have recovered impressively from the financial crisis over the past five years, and the economy has returned to a modest expansionary mode. But increasingly, companies are finding it difficult to keep their revenue rising, and even though efforts to control costs have in many cases allowed those companies to boost their earnings, rising margins will only carry a stock so far in the long run.

With that in mind and using data from S&P Capital IQ, let's look at the two Dow stocks that have posted the most revenue growth, comparing sales over the past 12 months with those of the previous 12-month period. What's particularly surprising is that only two of the Dow 30 manage to top the 10% mark: Microsoft (NASDAQ:MSFT) and Visa (NYSE:V).


Microsoft's place atop this list, with 14.4% revenue growth, is particularly surprising given the popular conception that the tech giant's best days are far behind it. Yet Microsoft has managed to find growth in a number of its segments. In its most recent quarter, for instance, Microsoft's Devices and Consumer segment saw sales rise by 12%, with huge sales of Xbox consoles driving growth, including 1.2 million Xbox One units. Yet Commercial division revenue also posted solid growth of 7%, with Office 365 more than doubling and Windows volume-licensing sales climbing 11%. The challenge that Microsoft faces is making sure that it emphasizes licensed products over hardware and other areas, because licensing offers the best gross margins and allows the most revenue to make its way toward the bottom line. With Microsoft having grown net income by almost 48% using the same time periods as the revenue-growth calculation, it appears that the tech giant is positioning itself for nice profit gains as well.


Visa's 12.8% revenue growth has produced much larger earnings gains, with net income having more than doubled. Investors have been concerned about the slowing pace of that revenue growth, though, with Visa's most recent quarterly results showing constant-currency revenue gains of just 9% year-over-year. For the most part, Visa has seen similar contributions from all of its segments, which include service, data processing, and other areas like Visa's European operations. Visa projected that full-year earnings growth would slow to 10% to 11%, but even at that lower rate, Visa is poised to outpace almost all of its Dow counterparts. Moreover, if the dollar starts to weaken against foreign currencies, it could create a revenue tailwind for the card giant that could boost unadjusted revenue even further.

Revenue is the lifeblood of every business, and it's important for companies to make the most of their opportunities to bring cash in. So far, Microsoft and Visa have done a good job recently of boosting their revenue, but they'll need to keep working hard in order to keep that growth from eroding.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Visa and owns shares of Microsoft and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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