David Sterman
Wall Street analysts, along with the financial media, will soon scour the landscape and make bold predictions about which stocks will have the biggest upside during the next 12 months.

Frankly, such bold calls hinge on the state of the U.S. economy. If the economy appears to be moving onto a higher plane of growth, then investors will reward companies that deliver the most robust growth. But if the economy slumps, then the more stable blue chip companies will likely get rewarded. These are the companies that manage steady (though unspectacular) growth during any economic climate.

For a number of companies, the outlook remains bright. More precisely, there are 37 stocks in the S&P 500 that are expected to boost sales and profits at least 10% in 2013 and grow by at least that much again in 2014, according to analysts' forecasts. These forecasts appear to be made with an eye on the economy that is still trying to get break-away speed." For now, the investment community is assuming the U.S. economy could grow between 1.5% and 2.5% in 2013, and perhaps a bit more robustly in 2014.

Among the 37 stocks, some seemingly deep bargains can be spotted. 

For example, Noble Energy (NYSE: NE), Ensco Int'l (NYSE: ESV) and Rowan Cos. (NYSE: RWC) are all expected to meet those growth criteria for 2013 and 2014, and are valued at just seven times projected 2014 profits. But these are highly cyclical businesses and, as such, they will never get a robust price-to-earnings (P/E) ratio anyway.

I've taken the liberty of scrubbing out energy-related cyclical stocks and winnowed the group to just 29 stocks. Even if the economy perks up in 2013, some may remain unconvinced that the U.S. economy can keep growing into 2014, as so many headwinds remain in place. This scenario could spell trouble for companies that didn't show their mettle during the last slowdown. So I've eliminated any company that saw sales fall more than 10% during the Great Recession. This narrowed the list down to 21 stocks...


David Sterman

David Sterman has worked as an investment analyst for nearly two decades. He is currently an analyst for StreetAuthority.com
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