A stock's price follows its earnings, which in turn follow its sales. A company needs only to take care of its business for investors to profit in the long run.
With that in mind, examining companies whose revenues and profits are rising -- and which inspire analysts' confidence in continued future growth -- should give us a fertile field in which to discover solid candidates for long-term outperformance.
The roaring 20s
Below are a handful of companies that have enjoyed 20% or more annual growth in sales and earnings over the past three years, and for which analysts forecast total growth of 20% or more over the next two years. We'll then pair up those predictions with the community stock research at Motley Fool CAPS, to get an idea of which companies the 135,000-plus members think have the best chances of beating the market over the long haul.
|
Company |
3-Year Past Revenue Annual Growth |
3-Year Past EPS Annual Growth |
Est. 2-Year Future EPS Growth |
Est. 2-Year Future Revenue Growth |
CAPS Rating (out of 5) |
|---|---|---|---|---|---|
|
Concur Technologies
|
42.2% |
45.4% |
28% |
34% |
** |
|
HMS Holdings
|
44.8% |
31.5% |
72% |
45% |
**** |
|
HQ Sustainable Maritime Industries
|
30.2% |
26.6% |
52% |
63% |
***** |
|
InnerWorkings
|
69.9% |
29.3% |
37% |
29% |
** |
|
Phase Forward
|
26.2% |
41.2% |
34% |
43% |
**** |
Sources: Capital IQ, a division of Standard & Poor's; Motley Fool CAPS.
Just because an analyst predicts that a company will feature healthy growth opportunities doesn't mean those predictions will become reality. But their preferred picks do offer an excellent starting place for your own research into extreme buying opportunities. Below, we'll look at the best-rated stock on today's list to see why it rose highest in investors' estimation, despite not having the highest EPS growth rate.
Tippling at the speakeasy
Consumers are taking the bait from HQ Sustainable Maritime hook, line, and sinker. Revenues for the Seattle-based fish grower and processor jumped 18% in the first quarter, rising to $10.8 million, while it reeled in a 22% jump in gross profits. Net income wriggled higher to $1.1 million compared to a $1 million net loss a year ago. With almost $55 million in cash and equivalents, the company remains long-term debt-free.
HQ Sustainable purchases and processes farm-bred tilapia in China. North America remains a large market for the fish, both fresh and frozen. That represents a potential growth market for the company, as the bulk of China's tilapia exports are primarily in frozen fillet form, representing about 73% of all tilapia exported from China. Restaurants like McCormick & Schmick have turned to tilapia as a cost-saving item. Yum! Brands'
CAPS member jerseytix sees HQ Sustainable Maritime becoming a big fish in a small pond: "Small, well-run company with good growth, excellent fundamentals, and interesting business model. Commercial fisheries are getting pounded which will limit competition."
HQ Sustainable wasn't able to hook its performance last month, though. It dropped 4%, while the other 95 companies comprising the CAPS Food Products sector rose 4% over that same period.
No Great Depression
It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Why not head over to the completely free CAPS service and let us hear what you've got to say about these -- or any other stocks you think we should fill up our dance card with?
