Growth stocks are the beauties of the stock world, plain
and simple. They're exciting, they have good stories, and
they can make you a lot of money.
But for all their beauty, growth stocks are also the
prima donnasof the market. They can be erratic, they
don't always live up to their billing, and they tend to
attract a shareholder base that's ready and willing to run at
the first signs of slowdown. For those reasons, caution is
certainly in order when you enter the world of growth
investing.
Fortunately,
The
Motley Fool's CAPS servicebrings us the collective
intelligence of a community of more than 140,000 investors
and is a great resource for separating
the Jessica Albasfrom the
Jabba the Hutts. Each of the stocks competing for this
week's top spot has a market cap of at least $100 million and
grew its net profit per share by an average of 15% or more
per year over the past three years. (You can
run the screenfor yourself, if you like.) So let's go
ahead and meet our contestants.
Oracle
Databases may have been
Oracle 's (Nasdaq: ORCL) initial
raison d'etre, but the company has gobbled up one
acquisition after another and become a $100 billion
powerhouse in the software industry under the leadership of
hard-driving CEO Larry Ellison. Today, the company's
offerings span from databases to middleware to applications,
all designed to make its customers more efficient and
competitive. The company boasts nearly 350,000 customers and
every one of the Fortune 100.
What does this all mean for investors? A peek at the
numbers gives a pretty good idea. Oracle's revenue grew more
than 60% between its 2006 and 2009 fiscal years, and profit
made an even better 70% jump. Over the past 12 months, the
company has sported an enviable net profit margin of 25%.
Google
Michael Jackson may have been the king of pop, but
Google (Nasdaq: GOOG) is the king of search.
Who the heck is
Yahoo! (Nasdaq: YHOO), anyway? And
Microsoft (Nasdaq: MSFT)? All I can say is
that both know exactly what Google's dust tastes like.
Between 2005 and 2008, Google's average annual
earnings-per-share growth was a smoking 38%. The company has
been riding the wave of Internet advertising growth and has
been basking in its own glory as it gobbles up market
share.
Many question whether the growth can continue, though, and
investors are particularly wary considering Google's
more-than-healthy price-to-earnings ratio. But even if the
pace slows, it seems that Google does still have runway.
Recessionary conditions no doubt constrained advertising
spending recently, but the need to effectively reach
consumers over the Internet isn't going to go away. And with
its hands in new areas -- like mobile phones through its
Android operating system -- the size of its addressable
market continues to grow.
FLIR Systems
If your portfolio is in need of some excitement,
FLIR Systems (Nasdaq: FLIR) may be the cure.
Now I'm not talking about a highly volatile stock that will
deliver stock market anxiety and sleepless nights, rather I'm
referring to the undeniable cool factor of FLIR's
business.
The company makes thermal imaging systems that are used by
the military and private industry to see things that the
human eye can't. While some purchases can be put off during a
recession, others can't. When the army needs gear to allow
soldiers to work optimally or refiners need a way to detect
emissions, there's rarely a good case for putting off
purchases.
As for growth, FLIR might as well be asking "What
recession?" Over the past 12 months, the company's earnings
per share jumped 39%.
Williams Companies
It's been a rocky road for
Williams Companies (NYSE: WMB) as the price
of natural gas has bounced around. Unfortunately, though,
natural gas' ability to bounce over the past year could be
compared to a bowling ball.
But natural gas remains a key piece of the energy puzzle
and boasts a cleanliness well beyond its more primitive
cousins, oil and coal. Williams itself is an integrated
natural gas company, meaning that it does everything -- finds
reserves, pulls the substance out, treats it, and transports
it over its network of pipelines.
Williams' bottom line has had its ups and downs over the
past few years and is down 40% over the past year, but its
trailing results are still 50% better than what it produced
in 2005.
Apollo Group
Apparently, knowledge trumps recession. Or at least
that's what one could guess based on
Apollo Group 's (Nasdaq: APOL) recent
results. Over the past 12 months, the company's net income
jumped 55% as revenue rose 23%. With its University of
Phoenix flagship, Apollo appears to be cashing in on people's
desire to become more marketable workers. Continued... |