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
140,000-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)
Chipotle Mexican Grill (NYSE:CMG)
24%
45%
72%
28%
*****
ClickSoftware
Technologies (Nasdaq:CKSW)
26%
232%
56%
34%
*****
Digital Realty Trust
35%
55%
32%
41%
*
New Oriental Education
36%
51%
75%
62%
*
Strayer Education (Nasdaq: STRA)
24%
26%
68%
61%
**
Source: CapitalIQ, a division of
Standard & Poor's; Motley Fool CAPS.
Just because an analyst predicts that a company will
feature fantastic 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, so let's see why the
operations of some of these companies may or may not be held
in high esteem by investors considering they appear to be
sales and profits machines.
Tippling at the speakeasy
Fast-food eateries
Burger King (NYSE: BKC) and
McDonald's (NYSE: MCD) were paragons of
frugal dining in the early part of the recession, but the
proliferation of discounted menus at casual dining
restaurants and the grinding levels of unemployment have cast
even their value propositions into doubt. When all is said
and done, eating at home still offers the cheapest option for
diners.
Burger King's sales fell 5% last quarter and profits fell
into the fat fryer, off 6%, missing analyst expectations.
Chipotle
Mexican Grillserved up tastier fare in comparison -- net
income jumped 77%, sales were up 14%, and even comps rose
more than 2% --
its shares were causing indigestion, giving back about
10% of their value just after earnings.
That could be due to the premium the stock has carried
compared with its rivals. Chipotle trades at 24 times
trailing earnings and 21 times forward estimates while other
fast food and casual dining options go for much less: Continued... |