Do you like growth stocks? Then you've come to the right place!
Although the U.S. economy is traipsing along with GDP growth of just over 1%, near-record-low lending rates and constant business innovation have profits at some companies soaring. And when I say "soaring," I'm not exaggerating in the slightest.
In a screen for publicly traded stocks poised to grow their earnings per share (EPS) by a minimum of at least 30% per year over the next five years, more than 100 stocks emerged as potential candidates. After weeding those down in an effort to establish as diverse a five-stock portfolio as possible, I was left with five stocks that offer an average EPS growth rate, between their reported 2015 EPS and Wall Street's estimated fiscal 2019 EPS, of 1,028%.
For those of you who are skimming, I'm going to go ahead and repeat this last point. This five-stock portfolio is expected to deliver an average EPS growth rate between 2015 and 2019 of 1,028%! If you're looking to add some growth to your portfolio, I'd urge you to give these five diverse stocks a gander.
Amazon.com: 1,782% projected EPS growth
For as long as investors can remember, Amazon.com (AMZN 4.35%) has thrown caution to the wind and emphasized anything but profitability: Instead, Amazon regularly reinvested its cash flow back into its business in an attempt to grow its market share and top-line growth rate. Needless to say, it's worked; according to a report from Forrester Research, Amazon accounted for 60% of all U.S. online sales growth in 2015.
But Amazon is far more than just a dominant U.S. retailer that has kept customers loyal using its Prime memberships. Amazon has also turned into a leading cloud hub, with scalable and affordable cloud-computing service options for small- and medium-sized businesses. Amazon Web Services (AWS) generated 58% year-over-year revenue growth in the second quarter, and over the trailing 12-month period has generated just shy of $10 billion in sales. AWS also has substantially higher margins than its traditional e-commerce retail sales, so this is a boon that could just keep on giving for Amazon and its shareholders.
After reporting $1.25 in full-year EPS in 2015, Amazon is "primed" (says Wall Street) to deliver $23.52 per share by 2019.
Silver Standard Resources: 1,010% projected EPS growth
Following a multiyear downtrend, precious metals have begun breaking out in a big way. Year to date, gold prices are up by more than $260 an ounce, while silver is up more than 30% per ounce. This has pushed metal miners like Silver Standard Resources (NASDAQ: SSRI) significantly higher. But as metal prices have risen, Silver Standard's costs have fallen. This is a result of smarter capital spending, as well as more efficient mining. In its second-quarter earnings report, Silver Standard Resources lowered its projected annual cash cost guidance for both its Marigold and Pirquitas mines.
Also helping out is the acquisition of Claude Resources and its Seabee mine. Claude's fairly recent expansion into the Santoy Gap pushed its annual gold production from around 50,000 ounces to north of 70,000 ounces, allowing the company to generate $20 million in annual cash flow, if not more. The addition of Claude Resources to Silver Standard's portfolio helped add further diversification, as well as instant cash flow and profits.
Wall Street now expects Silver Standard, after reporting a loss of $0.10 per share in 2015, to shine with $0.91 in full-year EPS by 2019.
Southwestern Energy: 879% projected EPS growth
As you may have rightly suspected, Southwestern Energy (SWN 7.79%), an oil and gas producer primarily in the Marcellus shale and Fayetteville shale regions of the U.S., has been hit hard in recent years by weaker oil and gas prices and unattractively high debt levels. However, the company has been proactive in bettering its situation.
As announced in the latest quarterly report, Southwestern Energy pushed $600 million of its debt out to a later maturity, while putting in place a plan to repay $1.2 billion by 2020. At the same time, the company has accelerated investments in its highest-margin projects. This could very well be why Southwestern Energy raised its total-year production guidance by 5% at the midpoint.
In addition, Southwestern Energy has midstream assets that help its long-term growth. Midstream transport and gathering contracts are typically forged for the long term, which leads to predictable cash flow. When energy prices do rebound over the long run, Southwestern Energy has multiple channels from which to benefit.
Wall Street anticipates that after reporting just $0.19 in annual EPS in 2015, Southwestern Energy could expand its full-year EPS to $1.86 by 2019.
Supernus Pharmaceuticals: 846% projected EPS growth
We can't rightly talk about growth stocks without mentioning at least one biotech company, which is where Supernus Pharmaceuticals (SUPN 1.88%) comes into play. Supernus specializes primarily in drugs for disorders of the central nervous system, with two currently approved by the Food and Drug Administration: Trokendi XR and Oxtellar XR.
During the second quarter, Supernus reported combined product prescription growth of nearly 39% to 123,758, and net product sales growth of 47% to $50.3 million. Note that with sales growth outpacing script growth, we're probably seeing a situation where Supernus' pricing power on its drug duo has improved. Looking at the longer term, CEO Jack Khattar believes the combined sales of both drugs could eclipse $500 million annually.
Supernus also has a promising pipeline. The company is enrolling in late-stage trials for SPN-810, an experimental drug designed to treat impulsive aggression in children ages 6 to 12 who have ADHD. If all goes well in clinical trials, a launch date in 2019 is likely. Furthermore, Supernus' phase 2b study for SPN-812, a treatment for ADHD, is fully recruited and expected to yield data in early 2017. Analysts have pegged peak annual sales for SPN-810 at around $500 million; following its approval, along with Trokendi XR and Oxtellar XR, Supernus could net around $1 billion in annual sales.
Having reported $0.28 in full-year EPS in 2015, Supernus is projected to generate $2.65 in EPS by 2019.
Stratasys: 621% projected EPS growth
Last, but not least, we have 3D printing company Stratasys (SSYS 1.78%). Its share price has been decimated over the past two years, as increasing competition and a potential overcapacity in 3D printers for enterprise customers have adversely affected its sales and profitability. Despite this recent weakness, there are reasons to believe Stratasys could be an excellent growth story worth considering.
Investors need to understand that 3D printing companies are really offering a razor-and-blades business model at its finest. Although 3D printers aren't cheap, and they're been the primary source of sales for companies like Stratasys, it's the materials and services used by 3D printers -- the "blades" -- that become the high-margin, recurring revenue for 3D printing companies. With a fairly large industrial base, Stratasys should be poised to see growth in these higher-margin blades in the coming years.
Stratasys, despite its acquisition-based hiccups, also offers solid diversification across industries. I believe the company offers a long-term growth opportunity in 3D medical printing, with life expectancies on the rise and the elderly population expected to nearly double between 2012 and 2050, to 83.7 million people.
After reporting a profit of $0.19 per share in 2015, Stratasys appears to be on track, according to Wall Street's estimates, to print $1.37 in full-year EPS by 2019.