When looking for companies to invest in, it is important to consider their growth prospects. Getting even one extreme growth stock into your portfolio can enhance your returns. This type of growth is common in the fast-moving field of technology.
The five companies below fit those criteria; all have provided sales growth surpassing that of the S&P 500 -- and probably will again. The stock returns should follow.
|
Company
|
1-Year
Revenue
Growth
|
1-Year
Stock
Return
|
CAPS
Rating
|
|
Garmin (Nasdaq: GRMN )
|
72%
|
(26%)
|
****
|
|
America Movil (NYSE: AMX )
|
31%
|
(9%)
|
*****
|
|
EMC (NYSE: EMC )
|
19%
|
1%
|
*****
|
|
NetApp (Nasdaq: NTAP )
|
18%
|
(25%)
|
***
|
|
FormFactor (Nasdaq: FORM )
|
9%
|
(49%)
|
*****
|
Source: Financial data taken from Capital IQ, a division of Standard & Poor's.
Company performance
Garmin is a classic growth stock. Deeply engaged in the exploding market for global positioning (GPS) gadgets, the company is growing revenue and earnings by leaps and bounds -- even in a bleak economy. It's an official recommendation of two Foolish newsletters, and trading at a ridiculously low trailing P/E around 11.5. The last earnings report didn't impress the Street, but that might make this the perfect time to invest in GPS tech.
America Movil's stock hit a brick wall in April, because the leader in Latin American telecom business added "only" 5.7 million new subscribers in the quarter. Fellow Fool Dave Mock said, "The latest generation of advanced services is only now starting to roll out across Latin America -- a market that has proved quite receptive to wireless data services," and the company will sell Apple's (Nasdaq: AAPL ) brand new iPhone 2.0 in all of its Latin markets. This growth story is far from over.
Data storage specialist EMC is growing in two distinct ways: by serial acquisitions, and by holding 85% of the stock in virtual machine pioneer VMware (NYSE: VMW ) , which has grown sales by about 80% a year for four years running and doubled its earnings in each of the last two years.
This is not the first time I've singled out EMC rival NetApp as a candidate for further research. The stock is so darn cheap and tasty, and the company is gearing up for a major worldwide sales blitz. "We must seize the opportunity now, and we are hiring sales people now while the opportunity is all around us," said CEO Dan Warmenhoven in the last earnings call, but the market gave him no credit for that long-term planning
Finally, you might ask what semiconductor testing guru FormFactor is even doing on this list. Sales growth of 9% is hardly the stuff of legend. But you have to remember that this company works in a very cyclical industry, where boom follows bust like waves on the ocean shore. A combination of serious price wars in the computer chip space, commoditization of memory chips, and a bad couple of years in the cell-phone market have contrived to produce a deep, dark bottom of the cycle -- but things are looking up again.
We're only two years removed from 55% revenue growth and a 90% earnings burst from FormFactor in the last upswing of 2006. And once again, this stock has taken a recent beating that left it looking far cheaper than its business performance would seem to justify.
Wall Street today; tomorrow, the world
As always, this is not a "Buy me now!" list -- just starting point for your own research. Two of these stocks have the backing of a Foolish newsletter, so a free 30-day trial subscription or two could help you on your way.
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