Go to the Globe and Mail homepage

Jump to main navigationJump to main content

(Tom Hahn/iStockphoto)
(Tom Hahn/iStockphoto)

NUMBER CRUNCHER

Twenty U.S. companies with surging sales despite plodding recovery Add to ...

What are we looking for?

U.S. companies that are growing their sales. While earnings grab investors’ attention, no firm can perpetually expand its profits if revenue remains stagnant.

In this plodding recovery, many enterprises are facing tough markets and cautious customers. So focusing on businesses with surging sales may provide a way to identify stocks with a scarce resource – growth potential.

More Related to this Story

How we did it

Our friend, Craig McGee, senior consultant at CPMS Morningstar Canada, began by looking at companies that are members of the S&P 500 (for large U.S. firms), S&P 400 (mid-sized firms) or S&P 600 (small firms). He broke out the 20 firms with the highest sales growth over the past five years. To ensure adequate diversification, he limited any one sector to no more than four stocks.

The accompanying table shows price-to-earnings ratios and yields as background information, but these elements weren’t factors in selecting the stocks.

More about Morningstar

Morningstar Inc. provides independent investment research in North America, Europe, Australia and Asia. Its research tool, Morningstar CPMS, provides quantitative North American equity research and portfolio analysis to institutional clients and financial advisers. CPMS data cover more than 95 per cent of the investable North American stock market.

What we found

Using the CPMS Backtest service, Mr. McGee looked at what would happened if he had selected a portfolio based on the above principles on Jan. 1, 1994, then refreshed the portfolio each year with updated selections.

He found that the strategy would have produced a total return of 20.3 per cent a year, well ahead of the 8.8 per cent total return generated over the same period by the S&P 500.

Remember, though, that these results do not take into account taxes or trading fees. As always, you should do your own research before buying any of the stocks listed here. And keep in mind that strategies that worked in the past don’t always continue to perform well.

Follow on Twitter: @IanMcGugan

 

U.S. sales growth

Rank Company Symbol Market
Cap
(US$-mil)
5-yr
Sales
Gwth
% *
Expec.
P/E
Expec.
Yield
%
Total
Rtn
YTD
%
1 Leucadia National Corp LUK-N 10,503 49.07% 11.00x 0.87% 25.00%
2 Vertex Pharmaceuticals VRTX-Q 17,715 41.66% n/c ** 0.00% 81.60%
3 Green Mountain Coffee GMCR-Q 9,626 41.04% 16.98x 0.00% 54.48%
4 Apple Inc. AAPL-Q 469,400 35.67% 11.74x 2.36% -1.27%
5 iGate Corporation IGTE-Q 1,913 30.53% 17.36x 0.00% 108.05%
6 Alexion Pharmaceuticals ALXN-Q 24,265 29.82% 39.96x 0.00% 32.37%
7 Cirrus Logic Inc CRUS-Q 1,550 24.93% 11.94x 0.00% -15.71%
8 Amazon.com Inc AMZN-Q 165,712 24.53% 140.58x 0.00% 44.58%
9 Netflix Inc NFLX-Q 19,285 23.41% 80.42x 0.00% 253.49%
10 Priceline.com Inc PCLN-Q 55,081 21.37% 22.80x 0.00% 72.39%
11 First Solar, Inc. FSLR-Q 5,114 20.43% 15.97x 0.00% 69.72%
12 Celgene Corporation CELG-Q 63,875 20.00% 23.44x 0.00% 97.92%
13 Monster Beverage Corp. MNST-Q 9,798 16.82% 23.60x 0.00% 10.77%
14 Deckers Outdoor Corp DECK-Q 2,350 16.80% 14.85x 0.00% 69.21%
15 Royal Gold Inc RGLD-Q 3,272 15.67% 36.06x 1.58% -36.75%
16 Triumph Group Inc TGI-N 3,832 14.85% 13.54x 0.22% 13.02%
17 Cliffs Natrl. Resources CLF-N 3,892 13.83% 12.28x 2.36% -32.93%
18 ArQule Inc ARQL-Q 149 13.57% n/c ** 0.00% -15.05%
19 HollyFrontier Corp. HFC-N 8,942 10.91% 10.91x 2.68% 1.27%
20 Intercontinental Exch ICE-N 14,048 10.52% 20.64x 0.00% 55.76%

* annualized point-to-point growth rate of sales for fiscal years 2008 through 2012. ** n/c = non-calculable due to negative expected earnings. Source: Morningstar Canada

Print

Download table as a CSV file

View full table

More Related to this Story

Topics:

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories