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Goldman's CEO Turns Bullish: Here are 10 Growth Stocks to Watch

Posted
11/21/2011 8:11:00 PM
By: Kapitall
Referenced Stocks:ASCA;CRR;CNX;CTCT;DTG;FELE;LVS;OYOG;QCOR;ZOLL

(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA. EPS data sourced from Yahoo! Finance.)

Despite the wealth of doomsday predictions for the global economic future, Goldman Sachs is preparing the company for a surprisingly quick economic rebound.

The move positions the company for a rebound ahead of most forecasters. This is a big move for Goldman, the fifth-largest US bank, whose stocks have dropped 41% year-to-date.

“The world will snap back and it will be a surprise and it will be faster than people think. I don’t know when that will be and we will gear ourselves accordingly,” Chairman and Chief Executive Officer Lloyd C. Blankfein said at an investor conference in New York hosted by Bank of America Corp. (BAC)’s Merrill Lynch unit. “We want to be in shape for the upturn.”

It appears the company feels this move will best position them for a rebound. But if the economy fails to turn around, will the bank’s value drop further?

“Blankfein, while noting that the firm is cutting costs and adapting to changing regulation and slower economic growth, said he is wary of overreacting by assuming the world has permanently changed,” reports Bloomberg.

Investing Ideas

Do you agree that earnings growth will snap back? If you do, the following list might be a good starting point.

One of analysts’ favorite profitability tools is DuPont analysis – it’s a way to look at changes in return on equity (ROE) profitability [i.e. net income/equity] by attributing those changes to certain sources. Some of the sources are more sustainable than others, thereby giving an analysis of strength in increasing profitability.

All of the companies mentioned below have seen improving DuPont trends–rising profitability and improving efficiency, all while reducing their leverage (i.e. a falling assets/equity ratio).

In addition, all of these companies have high levels of projected growth over the next five years, according to Wall Street analyst estimates.

Do you think there’s more upside to these high growth names? Use this list as a starting point for your own analysis.

Analyze These Ideas (Tools Will Open In A New Window)

1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned

List sorted by projected growth rate.

1. Las Vegas Sands Corp. (LVS): Develops, and operates various integrated resort properties primarily in the United States, Macau, and Singapore. EPS growth over the next 5 years projected at 53.13%. MRQ net profit margin at 17.63% vs. 11.24% y/y. MRQ sales/assets at 0.11 vs. 0.094 y/y. MRQ assets/equity at 2.678 vs. 3.072 y/y.

2. Questcor Pharmaceuticals, Inc. (QCOR): Provides prescription drugs for central nervous system and inflammatory disorders. EPS growth over the next 5 years projected at 41.25%. MRQ net profit margin at 38.2% vs. 36.84% y/y. MRQ sales/assets at 0.272 vs. 0.213 y/y. MRQ assets/equity at 1.272 vs. 1.324 y/y.

3. Constant Contact, Inc. (CTCT): Provides on-demand email marketing, social media marketing, event marketing, and online survey solutions primarily in the United States. EPS growth over the next 5 years projected at 40.60%. MRQ net profit margin at 9.84% vs. 6.56% y/y. MRQ sales/assets at 0.286 vs. 0.278 y/y. MRQ assets/equity at 1.325 vs. 1.36 y/y.

4. ZOLL Medical Corp. (ZOLL): Develops, manufactures, and markets resuscitation devices and related software solutions worldwide. EPS growth over the next 5 years projected at 40.50%. MRQ net profit margin at 6.97% vs. 5.16% y/y. MRQ sales/assets at 0.307 vs. 0.287 y/y. MRQ assets/equity at 1.26 vs. 1.284 y/y.

5. Franklin Electric Co. Inc. (FELE): Engages in the design, manufacture, and distribution of groundwater and fuel pumping systems. EPS growth over the next 5 years projected at 40.0%. MRQ net profit margin at 8.57% vs. 6.54% y/y. MRQ sales/assets at 0.266 vs. 0.241 y/y. MRQ assets/equity at 1.857 vs. 1.891 y/y.

6. OYO Geospace Corp. (OYOG): Engages in designing and manufacturing instruments and equipments used in the acquisition and processing of seismic data; and in the characterization and monitoring of producing oil and gas reservoirs. EPS growth over the next 5 years projected at 37.0%. MRQ net profit margin at 19.86% vs. 14.4% y/y. MRQ sales/assets at 0.233 vs. 0.222 y/y. MRQ assets/equity at 1.184 vs. 1.235 y/y.

7. Dollar Thrifty Automotive Group Inc. (DTG): Dollar Thrifty Automotive Group, Inc. through its subsidiaries, rents and leases vehicles through company owned and franchised stores under Dollar and the Thrifty brand names primarily in the United States and Canada. EPS growth over the next 5 years projected at 36.0%. MRQ net profit margin at 14.75% vs. 11.08% y/y. MRQ sales/assets at 0.174 vs. 0.17 y/y. MRQ assets/equity at 3.88 vs. 5.014 y/y.

8. CONSOL Energy Inc. (CNX): Engages in the production of multi-fuel energy and provision of energy services primarily to the electric power generation industry in the United States. EPS growth over the next 5 years projected at 35.75%. MRQ net profit margin at 11.% vs. 5.59% y/y. MRQ sales/assets at 0.125 vs. 0.115 y/y. MRQ assets/equity at 3.549 vs. 3.774 y/y.

9. Ameristar Casinos Inc. (ASCA): Operates as a gaming and entertainment company in the United States. EPS growth over the next 5 years projected at 35.31%. MRQ net profit margin at 6.2% vs. 3.98% y/y. MRQ sales/assets at 0.149 vs. 0.143 y/y. MRQ assets/equity at -19.296 vs. 6.127 y/y.

10. CARBO Ceramics Inc. (CRR): CARBO Ceramics Inc. manufactures and supplies ceramic proppants primarily used in the hydraulic fracturing of natural gas and oil wells in the United States and internationally. EPS growth over the next 5 years projected at 35.0%. MRQ net profit margin at 22.09% vs. 17.03% y/y. MRQ sales/assets at 0.241 vs. 0.203 y/y. MRQ assets/equity at 1.165 vs. 1.168 y/y.