Some companies make the headlines every day. But the ones
that will
make you richoften keep a low profile.
For instance, one company has seen its stock has more than
double in the past year, with solid earnings growth and
healthy profit margins and returns on equity. Insiders hold
almost 12% of its shares, a reflection of commitment and
confidence in the stock. It even sports a healthy 2% dividend
and has a reasonable valuation based on estimates of future
earnings. Are you intrigued?
Would you believe that this company is
Tupperware (NYSE: TUP)? That's right. I offer
it as evidence that seemingly boring companies can deliver
rather exciting performancesfor our portfolios.
Tupperware stock has grown by an annual average of 13% over
the past decade, during a period when the S&P 500 has
posted losses. It held up far better than the broader market
during the market meltdown in 2008.
If you're like me, you
knowthat boring companies can deliver
great results, but you still look more closely at
exciting companies. That's not crazy -- the surgical-robotics
company
Intuitive Surgical (Nasdaq: ISRG) has more
than doubled for me in recent months, and other high-growth
stocks
have similar potentialto turn thousands into millions.
But it's good to remember that powerful sleepers exist,
too.
Here's another one: a company that recently
doubledits earnings guidance. Specifically, its
management now expects that it will earn around $0.91 per
share in its third quarter, instead of the previously
expected $0.35 to $0.45. The company is
Black & Decker (NYSE: BDK), and the
driving forces are unexpectedly strong sales, rising profit
margins, and a lower tax rate.
Pros and cons
One advantage of ho-hum humdingers is that others don't
rush to them very quickly, so you get a chance to find them.
You might, for example, screen for companies with reasonable
price-to-earnings ratios and high revenue growth rates, and
look for contenders among them.
Company
CAPS
Stars(out of 5)
3-Year Revenue Growth Rate
P/E
Business
Flowserve
*****
16%
14
Pumps, motors, and seals
Mosaic (NYSE: MOS)
****
22%
17
Crop nutrients
Walgreen (NYSE: WAG)
****
10% Continued... |