There I was, rubbing my eyes over the weekend. I was looking over a list of the week's top stock performers on the New York Stock Exchange, only to find that Under Armour
Under Armour makes sweat-sucking performance apparel. Chipotle makes some really tasty burritos. Both companies happen to be active recommendations in the Motley Fool Rule Breakers newsletter service. Yes, that's the aggressive-growth stock newsletter that I write for. I just didn't expect high-octane picks to be percolating in the fuddy-duddy Big Board. I guess the only thing that would make this even more ironic is if the premium stock research service had a thing for the New York Stock Exchange itself.
What's that? It does? That's right, NYSE Euronext
So maybe you can now begin to relate to my eye rubbing. It was an overload of way too many unexpected things.
- All but 10 of the newsletter's picks over the past three years trade on the NASDAQ, yet here they are rocking the Big Board.
- The market traded sharply lower last week, and high-beta growth stocks tend to tank when that happens.
- Some of these winners are actually accidental tourists.
Big opportunities on the Big Board
Chipotle, Under Armour, and NYSE Euronext aren't exactly Big Board natives. Under Armour was trading in the secondary market under the ticker symbol UARM when David Gardner first singled out the athletic-apparel specialist. Chipotle probably would have gone the NASDAQ route if it wasn't spun off by NYSE-loyalist McDonald's
Then we have NYSE Euronext, which is what has become of David's original pick of Archipelago Holdings. OK, so Archipelago had its IPO on the NYSE three years ago, under the ticker symbol AX. Its calling card became the cutting edge Arca Ex electronic trading platform. Arca Ex was compelling enough to persuade the privately held NYSE Group to combine with the smaller Archipelago to become a publicly traded juggernaut.
As someone who spends most of his researching time buried deep in NASDAQ listings, the reason that I was rubbing my eyes was because they had never been this wide open. I had been limiting myself ... looking for growth almost exclusively in four-letter ticker symbol installments.
So I decided to cut the Big Board some slack. I slowed down to consume the stock listing pages that I normally fly through. I used computer screens to unearth NYSE-listed companies with a little growth sizzle.
Let me go over the three that intrigue me the most.
IDC posted healthy second-quarter results two weeks ago. Earnings climbed 33% higher on a 12% top-line boost. It's not just a quarterly fluke. IDC is looking to grow earnings 20% to 24% higher for all of 2007.
Instead of making lofty upfront payments to software makers for programs that may not pan out, companies pay Salesforce nominal monthly amounts to keep everyone tethered to one central app-crunching system. The company doesn't report earnings until next week, but it's been on a tear since going public three years ago.
The recent PS3 and Xbox 360 price cuts should be great for GameStop. Sure, hardware makers subsidizing lower price tags will motivate players to upgrade to the next-generation consoles. New system sales mean new software sales, a higher-margin category for retailers like GameStop. However, GameStop's highest margins are made on reselling used gear. The company can buy old games, accessories, and systems at a pittance and then mark them up liberally. What I'm trying to say is that folks upgrading their systems are going to be trading in a lot of their older systems, stocking GameStop with even more high-margin wares to sell.
Learning to fly without four-letter words
So what have I learned? That growth happens in all kinds of places and exchanges? You bet. Growth is also earned the same way on any exchange. Chipotle and Under Armour didn't take off last week by accident. Under Armor last week posted quarterly revenues and earnings growth of 51% and 136%, respectively. Chipotle also blew past Wall Street's expectations, the way it has in each of its first seven quarters as a public company.
That is real growth. Those are real investing opportunities. Who am I to penalize promising stocks just because they don't have enough letters in their ticker symbol? I'm still rubbing my eyes, but only because I want to make sure that I'm not dreaming.
Chipotle, Under Armour, and NYSE Euronext have all been recommended to Rule Breakers subscribers. A 30-day free trial subscription is available, if only so you can dig into the many growth stock ideas available in all of the trading exchanges. GameStop is a Motley Fool Stock Advisor newsletter pick. Chipotle B shares are a recommendation of Motley Fool Hidden Gems.
Longtime Fool contributor Rick Munarriz does own a few Big Board companies, but none that were mentioned in this column. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.