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Over the last several weeks, I have been compiling a list of stocks and have been researching them to see if they fit in the "growth" section of my long-term portfolio. The portfolio consists of the following other sections: Core, Hybrid and ETF. While I will do a breakdown of these positions later, today I am focused on the growth sector. These stocks need to be companies that have sustainable long-term growth. I'm not looking for speculative positions or "fly-by-night" hype stocks. I want companies that I can count on over the long haul.

I have done an individual analysis on each company in the following table below. Each analysis for the given company is hyperlinked at the bottom of the article and is right here on Seeking Alpha, in case anyone is interested in reading a more in-depth review. Below is the table with the company name, current price (as of this writing), market cap and 52-week range:

Company

Current Price

Market Cap

52-Week Range ($)

Visa (V)*

$160.88

$85.7 Billion

98.33 - 162.55

MasterCard (MA)*

$528.65

$63.17 Billion

336.26 - 530.59

eBay (EBAY)**

$53.49

$68.34 Billion

20.89 - 54.20

Starbucks (SBUX)

$54.94

$40.84 Billion

43.04 - 62.00

Panera (PNRA)

$162.93

$4.75 Billion

135.40 - 175.46

(*) = Indicates that this security made a new 52-week high on January 9th, 2012.

(**) = Indicates that this security made a new 52-week high on January 8th, 2012.

If you have read any of my previous articles on these companies, you will see a focus on revenue and earnings per share growth. You'll also see a stress on current and future valuations. Below are the following growth figures for both revenues and earnings per share. The table represents six years in total: the previous three years (2009-11), the current year results (2012) - or estimates if the company has not reported 4Q earnings yet - and the next two year future estimates (2013-14):

Revenues (In Millions):

Year

V

MA

EBAY

SBUX

PNRA

2009

+10.3%

+2.1%

+2.2%

-5.8%

+4.5%

2010

+16.7%

+8.6%

+4.9%

+9.5%

+14%

2011

+13.9%

+21.2%

+27.25%

+9.2%

+16.7%

2012

+13.4%

+10.2%*

+20%*

+13.67%

+15.25%*

2013

+10.3%*

+12.1%*

+16.5%*

+12.8%*

+14.3%*

2014

+11.3%*

+12%*

+14.1%*

+12%*

+12.5%*

(*) = Indicates that these percentages are based on estimates of future revenues.

In the above chart, there is one figure that is in bold. That is the 2009 revenue losses by Starbucks. This figure is in bold because it's the only one that represents a negative value, and I didn't want any readers to miss it when skimming. For the most part, many of these figures are in the double-digit range. Possibly even more important is the future prospects are all in the double digits.

While these figures are not actual, they do provide us a basis for future expectations. It's true that the growth may come in lower than it is currently estimated, but it's encouraging to see. The three companies - MasterCard, eBay, and Starbucks - who experienced slower growth in 2009 and 2010 have boosted revenues significantly and are predicted to keep it that way moving forward.

After looking at revenues, let's take a look at the earnings per share (EPS) growth. The table outlay will be the same as the one above. I will use the percentage change from the previous year and will show the same time frame as above. Below, the EPS growth table:

Year

V

MA

EBAY

SBUX

PNRA

2009

+23.5%

+6.5%

+34.5%

+21%

+25.2%

2010

-3.5%

+25.8%

-25.6%

+47.6%

+30.2%

2011

+33%

+35.5%

+80.8%

+30.6%

+25.7%

2012

+77.4%

+15.25%*

-4.5%*

+10.5%

+29.25%*

2013

+14.2%*

+16.2%*

+16.5%*

+20.1%*

+19.5%*

2014

+15.3%*

+18.46%*

+16%*

+21.8%*

+16.4%*

(*) = Indicates that these percentages are based on estimates of future revenues.

Just like with revenues, the years that posted annual declines in EPS growth are in bold above. EPS can be affected by different accounting methods and may or may not reflect the exact quality of the actual company's performance that year. Overall, EPS grew in double digits for a majority of the holdings in a majority of the years.

Our next job is to determine whether or not the price justifies the valuation - both currently and in the future. When examining long-term growth stocks, they likely won't have low valuations. This is simple: investors will have to "pay-up" for growth. In other words, these stocks will trade at premiums to other stocks because of the superior future growth they present. Below will be a table with the current P/E ratio, the 2013 P/E ratio and the 2014 P/E ratio:

P/E Ratio

V

MA

EBAY

SBUX

PNRA

Trailing Twelve Month (TTM)

48

31

18

31

30

2013 P/E Ratio

22

20

19.3

25

22

2014 P/E Ratio

19

17.3

16.7

21

20.1

Obviously, the 2013 and 2014 P/E ratios are based off of estimates of future earnings, but they seem rather reasonable when considering the actual growth of these companies. Do not expect to see single-digit multiples from companies with high, solid growth. This is the premium that we talked about above, where investors will have to "pay-up" for companies with high growth.

In another attempt of viewing the valuation relative to future growth, let's look at the PEG ratio for these five companies. The PEG ratio measures the growth of the company, relative to the valuation (P/E ratio). Below are the 1-year, 2-year and 5-year PEG ratios:

PEG Ratio

V

MA

EBAY

SBUX

PNRA

1-Year

1.31

1.23

1.16

1.24

1.13

2-Year

1.24

1.08

1.04

0.96

1.23

5-Year

1.17

1.27

1.57

1.37

1.38

Note: The 5-year PEG estimate is taken from Yahoo! Finance.

In the above table, only one figure is highlighted. This number is highlighted because it is the only one that is valued below 1. The PEG shows the potential overvalued or undervalued state of a specific stock, based on future growth. The equation divides the P/E ratio by the annual EPS growth. If the resulting figure is equal to 1, it is fair valued. Below 1 would indicate a potentially undervalued stock and over 1 would indicate a potentially overvalued stock.

Like we discussed earlier with the P/E ratios, investors won't likely find any of these readings to be less than 1. The exception to this is Starbucks in 2014. From the above table, a reading of 0.96 may indicate it is trading ever so slightly on the undervalued side. And with a 2014 P/E ratio of 21, this very well might be the case.

Aside from growth and valuation, there are other metrics that may or may not sway investors minds. Below is a table with some key metrics for each of the five companies:

Metric

V

MA

EBAY

SBUX

PNRA

Dividend (Annual)

$1.32

$1.20

0

$0.84

0

Yield

0.85%

0.23%

0

1.54%

0

Short-term Debt

0

0

0

0

0

Long-term Debt

0

0

$4,506 M

$549.60 M

0

The table above only has a handful of what I would consider key metrics. It includes the dividend and the yield, if there is one at all. Many growth stocks do not pay out a dividend and this is apparent with stocks such as eBay and Panera.

It's very nice to see no long-term debt, especially when looking for growth stocks. Many stocks do have debt, and there's nothing wrong with that - most of the time. In these cases, I don't see a reason to worry, but in the case for Visa, MasterCard and Panera, it's very nice to look at the balance sheet and see zero debt, both long and short term.

Last but not least, I think we should look at each stock's long-term chart. Below will be the 3-year chart of each company with the RSI and MACD measurements. Also to be included will be the 50-day, 100-day and 200-day simple moving averages. This will help illustrate the overall trend of the stock over the last three years. Below, the charts, starting with Visa:
Visa (click to enlarge):

Source: Stockcharts.com

MasterCard (click to enlarge):

(click to enlarge)

Source: Stockcharts.com

eBay (click to enlarge):

Source: Stockcharts.com

Starbucks (click to enlarge):

Source: Stockcharts.com

Panera (click to enlarge):

Source: Stockcharts.com

I think all of these stocks present excellent long-term growth advantages, and deserves a place in many investor's portfolios. Five stocks are either enough to start a growth portfolio, or small enough to add to a "conservative" or core portfolio. I believe these stocks provide fair valuations based on future growth and can give a much needed boost to any investor's portfolio.

I also think it's important to encourage discussion beyond this article. Perhaps you, the reader, have some stocks that you think should be included here, and I encourage you to mention them below. With enough added feedback, this could greatly aid those looking for growth stocks that might be appropriate for their portfolios based on certain investment needs. So please, I encourage the addition - or subtraction - of any other growth stock you may have in mind.

For a more in-depth analysis on Visa, please click here.

For a more in-depth analysis on MasterCard, please click here.

For a more in-depth analysis on eBay, please click here.

For a more in-depth analysis on Starbucks, please click here.

For a more in-depth analysis on Panera, please click here.

Source: A Growth Portfolio For Today's Markets And Beyond