Growth-oriented investors often gravitate toward companies with double- or triple-digit sales and earnings growth. That's certainly an easy way to narrow down the list of the highest-growth stocks, but focusing on headline numbers can cause investors to overlook "slow growth" companies with hidden growth engines.

If you dig deeper into some of those slow-growth companies, you might find certain high-growth businesses that are becoming more significant to their long-term growth. Let's examine three companies that fit that description: Corning (NYSE:GLW), IBM (NYSE:IBM), and Cisco (NASDAQ:CSCO).

A tortoise wins a race against a hare.

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Corning: Gorilla Glass

A 167-year-old glass and ceramics maker seems like a textbook slow-growth investment. Yet Corning's stock rallied nearly 190% over the past five years, crushing the S&P 500's 88% gain.

That rally was sparked by investor interest in its Specialty Materials business, which makes the chemically toughened Gorilla Glass for iPhones and other consumer devices. Corning has continuously upgraded Gorilla Glass with tougher versions, like Gorilla Glass 5, and new versions like Gorilla Glass Auto for cars and Gorilla Glass SR+ for wearables.

Corning's Specialty Materials unit is now its fastest growing business. Its revenues rose 26% annually to $373 million, or 14% of the company's top line, last quarter. That growth offsets the weakness of its Display Technologies business, which is struggling with soft demand for LCD panels, while complementing the stable growth of its Optical Technologies, Life Sciences, and Environmental Technologies businesses.

Corning's many strengths still outweigh its weaknesses, and analysts expect its revenue and earnings to respectively climb 7% and 10% this year.

IBM: Strategic imperatives

Big Blue, which was founded 106 years ago, is younger than Corning -- but many investors think that it's run out of room to grow. Its core businesses of IT services, business hardware, and business software all face tough headwinds, and the company's weaknesses often overwhelm its strengths.

However, IBM recently reported 4% year-over-year sales growth during its fourth quarter -- representing its first quarter of positive growth in nearly six years. Big Blue accomplished this by repeatedly divesting its slower-growth businesses and investing heavily in five key "strategic imperatives" -- cloud, analytics, mobile, security, and social technologies.

A graphical depiction of a connected smart city.

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IBM's strategic imperatives (SI) revenues rose 11% to $36.5 billion during fiscal 2017 and accounted for 46% of its total revenues. That's up from 41% in 2016, and indicates that IBM is finally offsetting the weakness of its legacy businesses with the fresh growth of its SI businesses.

Wall Street expects IBM's revenue growth to stay roughly flat this year, and for its earnings to rise 3%. Those numbers look anemic, but they could climb faster as its SI efforts bear fruit.

Cisco: Security and cash repatriation

Wall Street expects networking hardware giant Cisco's revenue and earnings to respectively rise just 1% and 3% this year. Cisco's aging core business of routers and switches remains in decline, and its higher-growth businesses can't fully offset that weakness.

Cisco's fastest growing business is its Security unit, which shields its enterprise customers from data breaches and hacks. Cisco greatly expanded that unit over the past few years via acquisitions of smaller firms like Sourcefire, ThreatGRID, CloudLock, and Lancope.

A businessman presses a "cloud" of digital padlocks.

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Cisco's Security revenues rose 8% annually last quarter and accounted for 5% of its top line. That figure might seem insignificant, but the unit's growth could accelerate as Cisco develops more security tools or acquires more companies.

Cisco could potentially do that by repatriating a large portion of its overseas cash, which will be taxed at much lower rates under recent corporate tax changes. The company finished last quarter with $71.6 million in cash, cash equivalents, and investments, but just $2.5 billion of that total was available in the US.

Bringing that cash home opens the door to big buybacks, dividend hikes, or domestic acquisitions, all of which could make Cisco a more attractive long-term investment.

The key takeaway

Investors should always look beyond the headline numbers to see if a company has hidden strengths. Corning, IBM, and Cisco won't become high-growth plays anytime soon, but their smaller growth engines could evolve into stronger pillars of growth over the next few years.

 

Leo Sun owns shares of Corning. The Motley Fool recommends Cisco Systems and Corning. The Motley Fool has a disclosure policy.