Investments that have been
successful over the long termalmost assuredly share at
least one thing in common -- growth. You'll be able to find
very few companies that have been unable to increase their
earnings and yet still have produced good returns for
shareholders.
Think about it this way: Dividends aside, investors reap
their gains when a company's stock price goes up. The stock
price is typically driven by two levers, earnings and the
multiple that investors are willing to pay for those
earnings. Since earnings multiples tend to fluctuate within a
certain range, long-term investors should have a keen focus
on the company's ability to increase earnings.
Does it seem too simple? Maybe keeping it simple is a good
plan sometimes. After all, as Third Avenue's Marty Whitman
has put it:
Based on my own personal experience -- both as an
investor in recent years and an expert witness in years
past -- rarely do more than three or four variables really
count. Everything else is noise.
With that in mind, I've kept it simple and dug up five
stocks that analysts expect to notch long-term earnings
growth of 10% or better. I've also pulled up the CAPS rating
for each stock to show what the 140,000-member
Motley Fool's CAPS communitythinks of the companies'
prospects.
Company
Expected Growth
Forward P/E
CAPS Rating
(out of 5)
MEMC Electronic Materials (NYSE:
WFR)
18%
16
****
Oshkosh (NYSE: OSK)
14%
11
**
Best Buy (NYSE: BBY)
13%
12
**
Stryker (NYSE: SYK)
13%
13
****
Chicago Bridge
& Iron (NYSE: CBI)
12%
12
*****
Morgan Stanley (NYSE: MS)
12%
9 Continued... |